The Arafura Resources Limited (ASX: ARU) share price is deep in the red after coming out of a trading halt today.
At the time of writing, the mining outfit's shares are down an astonishing 20.59% to 13.5 cents.
Let's take a look at what Arafura released to the ASX this morning.
Arafura moves closer to production
Investors are dropping Arafura shares on news of the company's latest capital raising.
According to its release, Arafura advised it has received firm commitments to raise $40 million through a share placement. The offer was presented to domestic and international institutional investors at an issue price of 12 cents per share. This equates to roughly 333.3 million new ordinary shares being added to the company's registry.
The shares will be split across two separate tranches, with the first portion falling under the company's listing rule 7.1. This allows up to 15% of its shares to be issued without shareholder approval.
The second portion of shares will be subject to shareholder approval at a meeting to be held in early August.
Proceeds of the placement will be used to commence Front End Engineering and Design (FEED) activities at the Nolans Project. In addition, the company will also set aside some funds for general working capital purposes.
Arafura managing director, Gavin Lockyer commented:
We are delighted with the support for the Placement, and welcome a number of Australian and offshore institutional investors to the register.
The Nolans Project is the only new shovel ready NdPr Oxide project in Australia capable of delivering advanced materials into the critical minerals supply chain.
Nolans has the potential to diversify rare earth supply chains whilst seeding new industry in Australia, one of the world's safest and most secure jurisdictions.
In further news, Arafura will offer a Share Purchase Plan (SPP) to existing shareholders in hopes to raise $5 million. The funds will be allocated for the same purposes as mentioned above.
Arafura share price summary
The start of 2021 saw the Arafura share price accelerate to a multi-year high of 30 cents. However, after some serious profit-taking, the company's shares have lost more than half their value in just 6 months.
Arafura has a market capitalisation of around $155 million, with more than 1.1 billion shares on its books.
