Andromeda (ASX:ADN) share price sinks 15% on capital raising update

It’s been a day to forget for Andromeda shareholders…
The post Andromeda (ASX:ADN) share price sinks 15% on capital raising update appeared first on The Motley Fool Australia. –

The Andromeda Metals Ltd (ASX: ADN) share price is losing territory today after coming out of a trading halt. This comes after the mineral exploration company announced an update to its capital raising efforts.

During late afternoon trade, Andromeda shares are down a sizeable 15.56% to 15.2 cents.

Let’s take a closer look at what the company announced to the ASX market.

Capital raising completed

Investors have been punishing the Andromeda share price in fear of an impending shareholder dilution.

According to its release, Andromeda successfully raised $30 million (before costs) by a way of placement. The company received strong support from new and existing shareholders, with the introduction of high-quality domestic and offshore institutions.

The offer will see roughly 200 million new ordinary shares, at a price of 15 cents each, allocated to participating investors. This represents a 16.7% discount on the issued capital prior to when the company announced the placement (18 cents).

Andromeda will use the proceeds from the capital raise to fund a number of initiatives. This includes the bulk of the money going towards the Great White Project pre-construction and long lead items such as plant equipment purchases. In addition, the remaining amount will be allocated to Detailed Feasibility Studies (DFS), product development and marketing, research and exploration activities, and general working capital requirements.

Complementing the placement, Andromeda will also launch a Share Purchase Plan (SPP) to retail investors. The offer will see the company hoping to raise a further $15 million, with 100 million new shares created. The terms of the SPP will be the same conditions as the placement.

Settlement is expected to occur on Tuesday 6 July 2021, with the new shares available for trading the day after.

Andromeda’s managing director, James Marsh, commented:

The Company thanks our existing shareholders for their ongoing support and welcomes the new institutional investors to the register. The support led to demand in excess of the funds sought by the Company. Andromeda has not had to raise funds for the past two years and the equity funding, on the back of the MSI binding offtake agreement, provides the Company with the financial support it needs to complete the Great White DFS later this year, leading into construction and mining next year.

About the Andromeda share price

Adding to today woes, Andromeda shares have fallen around 45% year-to-date, but have risen 200% over the past year. The company’s share price reached a record high of 45 cents in March, before being sold off.

Andromeda presides a market capitalisation of roughly $329 million, with more than 2.1 billion shares outstanding.

The post Andromeda (ASX:ADN) share price sinks 15% on capital raising update appeared first on The Motley Fool Australia.

Wondering where you should invest $1,000 right now?

When investing expert Scott Phillips has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for more than eight years has provided thousands of paying members with stock picks that have doubled, tripled or even more.*

Scott just revealed what he believes could be the five best ASX stocks for investors to buy right now. These stocks are trading at near dirt-cheap prices and Scott thinks they could be great buys right now.

*Returns as of May 24th 2021

More reading

Andromeda (ASX:ADN) share price slides 8% despite positive updates
Why the Minotaur Exploration (ASX:MEP) share price is up 22% today
Why the Andromeda Metals (ASX:ADN) share price is surging 20% today

Motley Fool contributor Aaron Teboneras has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

Trade The World Anywhere & Anytime!

Mobile app platform with over 50,000 global listed securities across 12 markets (over 70% global market capitalisation), right from your Android or iOS device.

Integrated with exclusive trading idea and investment analysis tools to help you find actionable insight on virtually every financial instrument across our 12 global markets, to help you optimise your trading strategies.

Refer Your Friends

Tell your friends about Monex and gift them FREE access to our trading tools.

We respect your privacy and will only send this one email notification to your friends. 

Share With Your Friends

Share on facebook
Share on twitter
Share on linkedin

Monex Trading Tools Access and Usage Terms

The Monex Trading Tools (referred to as ‘tools’ hereafter) are available to you inside your client portal;

To activate access to the tools, you must have a verified and approved trading account and have made a deposit of at least AUD $1000.

An active and funded account with a positive trading balance is required to continue to have access to the tools;

Although the tools are available to you indefinitely, Monex Securities may at it’s discretion disable access to the tools in the future;

Monex securities reserves the right to change these terms and conditions from time to time, as it sees fit, without notice.

Important Notice
iOS & Android App - 12 International Markets & Over 70% Global Market Cap. $0 Brokerage On US Trades. Click Here!