The Galan Lithium Ltd (ASX: GLN) share price opened lower on Friday after the company successfully completed a $50 million institutional placement. The lithium explorer plans to use the funds raised to accelerate the development of its lithium projects.
At the time of writing, the Galan share price is down 5.86% trading at $1.21.
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Galan Lithium share price lower following capital raising
Galan advised that it has received firm commitments to raise $50 million through a two-tranche institutional placement at $1.15 per share or a 10.2% discount to its last closing price of $1.28 on 11 August.
Tranche one will raise a total of $29.8 million, with new shares to be issued on Friday, 20 August.
Tranche two will seek to raise a further $20.2 million, subject to Galan shareholder approval, sought at the company's extraordinary general meeting in late September.
Galan notes that tranche two was subscribed by two institutional investors with a track record of successful investments in the natural resources sector.
What are the funds for?
Galan's June quarter results highlighted near term plans to convert lithium resources to reserves as well as the commencement of drilling programs.
According to today's announcement, the proceeds from the placement will be used to accelerate drilling activities to convert existing resources to reserves, fund ongoing exploration activities and the completion of feasibility studies.
What did management say?
Galan managing director Juan Pablo Vargas de la Vega said:
We are delighted to announce the completion of the placement which has enabled us to introduce a number of high quality institutions to Galan's register.
This represents a significant milestone in the history of the company and the recognition from these leading investors provides significant external validation for Galan's extensive portfolio of strategic lithium projects.
Galan Lithium share price snapshot
Despite today's pullback, the Galan Lithium share price is up 229% year-to-date and has surged 713% in the last 12 months.
The lithium explorer has a market capitalisation of just $313 million.
