29Metals Ltd (ASX: 29M) shares are catching the eye of investors on Thursday.
But not for a good reason.
In morning trade, the ASX All Ords stock is down a massive 28% to 26.5 cents.
Why is this ASX All Ords stock crashing?
This copper miner's shares are under pressure today after it completed a fully underwritten institutional placement and the institutional component of a fully underwritten accelerated non-renounceable entitlement offer.
According to the release, the placement and institutional entitlement offer will raise approximately $154 million at an offer price of 27 cents per share.
This represents a 27% discount to the last closing 29Metals share price of 37 cents.
The ASX All Ords stock advised that the placement and institutional entitlement offer received strong support from both new and eligible existing institutional shareholders.
Existing shareholders (excluding EMR Capital) subscribed for approximately 82% of their entitlements in the institutional entitlement offer. New shares not taken up by both eligible and ineligible institutional shareholders have been fully allocated to eligible institutional investors.
Why is it raising funds?
Management advised that the proceeds of the equity raising will support a balance sheet reset and fully fund the Gossan Valley project to first ore. The latter follows the approval of the project by the company's board this week.
The ASX All Ords stock's CEO, James Palmer, explained:
Net proceeds from the equity raising and refinancing of senior funded debt facilities provides 29Metals with the balance sheet needed to pursue our strategic objectives. […] In addition to the deleveraging impact of the Equity Raising, the proceeds will be directed towards fully funding the Gossan Valley project at Golden Grove to first ore.
Gossan Valley is a milestone project for the Company, providing production flexibility from an additional and independent mining front, with the potential for future Gossan Valley Mineral Resources extensions from planned in-mine and near mine exploration drilling, as well as a higher-grade replacement ore source for Scuddles.
Palmer also commented on the success of its equity raising. He was pleased with the support, stating:
The level of support shown by our existing shareholders, as well as new investors, has been very encouraging. This Equity Raising drives a balance sheet reset, fully funds development at Gossan Valley to first ore and provides support to progress water reduction efforts at Capricorn Copper, as well as general working capital.
The company will now push ahead with the retail component of the equity raising, which aims to raise approximately $26 million on the same terms.
