Why is the Renascor Resources share price sinking 8% on Thursday?

The Renascor Resources Ltd (ASX: RNU) share price has returned from its trading halt and dropped into the red.

In morning trade, the battery materials explorer's shares are down 8% to 29.5 cents.

Why is the Renascor share price sinking?

The weakness in the Renascor share price has been driven by the company launching and completing a fully underwritten institutional placement.

According to the release, the company has raised approximately $70 million from institutional investors at a 14% discount of 27.5 cents per share.

The proceeds from the placement will be used to progress the development of the Siviour Battery Anode Material (BAM) project.

Management notes that on a pro forma basis, Renascor is well-funded with a cash balance of $140 million at 30 November 2022.

'A transformational year'

Renascor's managing director, David Christensen, appeared to be very pleased with the news. He said:

The completion of this Placement caps off a transformational year for Renascor. The strong demand received from both domestic and offshore institutional investors is a testament to the world-class nature of the BAM Project and the significant steps undertaken by the Company to progress its development, following the recent receipt of the PEPR approval and grant of a conditional A$185 million Australian Government loan under the Critical Minerals Facility.

Christensen also revealed that the placement received strong support from both new and existing institutional investors. He added:

The Placement was well supported by existing Renascor shareholders and will also see a range of new institutional investors join the register. The introduction of these high-quality investors, together with the support shown by existing shareholders, has provided Renascor with the flexibility to bring forward construction and operation of the Siviour upstream operations and allows the Company to take a staged, de-risked approach to BAM Project development.

Renascor expects to progress the BAM Project towards a final investment decision in 2023.