The Vulcan Energy Resources Ltd (ASX: VUL) share price has returned from its trading halt and is sinking on Thursday.
In morning trade, the clean lithium company's shares are down 10% to $14.40.
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Why is the Vulcan share price sinking?
The Vulcan share price has come under pressure on Thursday after receiving firm commitments for its $200 million underwritten placement to sophisticated, professional, and institutional investors.
According to the release, the company is raising the funds at an offer price of $13.50 per new share. This represents a discount of 15% to the Vulcan share price prior to its trading halt.
The release notes that the placement was strongly supported by new and existing shareholders. This includes Gina Rinehart's Hancock Prospecting and a number of global ESG-focused institutions.
The settlement of the placement is expected to occur on 21 September. After which, a share purchase plan will open on 24 September. This will be available to eligible existing Vulcan shareholders and will seek to raise up to a further $20 million at the same price.
Why is Vulcan raising funds?
Vulcan is raising funds to support its goal of becoming the world's first fully integrated renewable energy and zero carbon lithium company, with phase 1 production targeted for 2024.
It is also seeking to expand its Zero Carbon Lithium Project development at a time of unprecedented demand for lithium chemicals to supply the transition to electric vehicles in Europe.
Vulcan's Managing Director and CEO, Dr. Francis Wedin, said: "We would like to thank our existing shareholders, including Hancock Prospecting, and new ESG-focused institutional shareholders, for supporting us in this placement to accelerate and expand our integrated renewable energy and lithium development strategy."
"We are now well positioned to pursue the targeted acquisition and upgrade of existing brownfield energy and brine infrastructure, to de-risk and grow our development plans, as well as to increase our production pipeline from our existing license areas."
"This also allows us to complete the targeted acquisition and refurbishment of exploration equipment which will assist with executing on our project development in a timely manner. The Vulcan team remains focused on developing our world-first dual renewable energy and Zero Carbon Lithium business, with phase 1 production to supply the EU battery market targeted for CY2024," he concluded.
The Vulcan share price is up over 400% in 2021.
