The Sayona Mining Ltd (ASX: SYA) share price has come out of a trading halt, recording heavy falls today.
This follows an update from the emerging lithium producer's update in regards to its recent share placement.
During early afternoon trade, Sayona Mining shares are down 8.25 % to 8.9 cents apiece. In comparison, the All Ordinaries Index (ASX: XAO) is up 0.9% to 7,609 points.
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What's dragging the Sayona Mining share price lower?
Investors are scrambling to sell Sayona Mining shares as the company prepares to dilute existing shareholder value.
According to its release, Sayona Mining advised it has received strong support to raise $45 million through a share placement. The offer was presented to both institutional and professional/sophisticated investors at an issue price of 7.5 cents per share. This equates to roughly 600 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% or approximately 423 million shares to be issued without shareholder approval.
The second portion of shares will be subject to shareholder approval at a General Meeting sometime around 17 August 2021.
Notably, Sayona Mining's major shareholder and strategic partner, Piedmont Lithium Inc (ASX: PLL) subscribed for $8 million in shares. This is being allocated to the second tranche of the placement.
The funds will be used to support the acquisition of North American lithium and advance Abitibi lithium hub in Quebec, Canada. This comes as the electric vehicle industry in North America is witnessing strong demand for battery metals.
Furthermore, the company will offer a Share Purchase Plan (SPP) to retail investors to raise an additional $5 million. The SPP will be offered at the same price as the placement. The closing date of the SPP is on 18 August 2021.
Management commentary
Sayona Mining managing director, Brett Lynch spoke about the successful placement, saying:
We are delighted by the support for the Placement from major and new institutional investors in Canada, the United States, Asia and Australia, as we build our institutional shareholder base.
The capital raising has been structured to ensure retail shareholders have the same opportunity to participate and we look forward to undertaking the SPP on the same terms as the Placement.
The Sayona Mining share price has gained more than 800% over the past 12 months, and up almost 900% in 2021.
