The Australian Potash Ltd (ASX: APC) share price has come out of a trading halt today following a successful placement.
During morning trade, the mineral exploration company's shares are swapping hands for 9.2 cents, down 20%. It's worth noting its shares have plummeted 30% since 22 October.
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What's driving the Australian Potash shares lower?
A possible catalyst for today's fall in the Australian Potash share price could be concern about an impending share dilution.
In its release, Australian Potash advised it had successfully received commitments to raise $12 million through a two-tranche placement.
The capital raise gathered supported by a number of investors to help accelerate the company's Lake Wells Sulphate of Potash (SOP) Project.
In total, 150 million shares will be issued at an offer price of 8 cents apiece. This represents a 30.4% discount to the last closing price of 11.5 cents on 28 October (before going into a trading halt).
The first tranche will fall under the company's listing rule 7.1, allowing around 97.49 million shares to be issued freely.
The second tranche, about 52.5 million shares, will be subject to shareholder approval at an annual general meeting (AGM) on 15 December.
Proceeds of the placement will be allocated in developing and de-risking the Lake Wells SOP Project over the coming months. The company is aiming to achieve a final investment decision (FID) for the end of the first quarter in 2022. The funds will be used for:
- Borefield drilling and test pumping;
- Earthworks and site-based expenditure; and
- Working capital and general purposes.
Furthermore, Australian Potash will offer a share purchase plan (SPP) to retail investors to raise an additional $2 million. The SPP will be offered at the same price as the placement and is also subject to shareholder approval at the AGM. The closing date of the SPP is 13 December 2021.
What did the head of Australian Potash say?
Australian Potash managing director and CEO Matt Shackleton commented:
…Our progressive de-risking strategy, when applied to the Mineral Resource, is to continue developing bores, pump-testing those bores and then reconciling recorded flow rates back to the hydro-model, which is effectively our mine development plan. At this point, our schedule indicates we will have approximately 30%-50% of the production borefield by volume developed through Q1 2022.
Corporately we remain focused on finalising credit approval processes for the balance of the syndicated, development debt facility.
About the Australian Potash share price
It's been a tough ride for Australian Potash shareholders, with the company's shares falling more than 30% year-to-date. Looking at a longer time frame, the Australian Potash share price is down around 29% since this time last year.
Based on today's price, Australian Potash presides a market capitalisation of around $74.7 million.
