The Vimy Resources Ltd (ASX: VMY) share price is plummeting after announcing a completed equity raising, and new Share Purchase Plan offer.
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The Vimy Resources Ltd (ASX: VMY) share price is plummeting in early afternoon trade. This comes after the company announced it has completed an equity raising, and opened a Share Purchase Plan (SSP) offer.
At the time of writing, the uranium producer’s shares are swapping hands for 11.5 cents, down 14.8%.
Investors are heading for the hills, dumping Vimy shares as impending share dilution appears on the horizon.
According to its release, Vimy advised it has received firm commitments to raise $18.5 million from institutional and sophisticated investors. The strong support saw a number of new domestic and international customers to be added to the company’s registry.
The well-supported placement will see Vimy create 168.2 million new ordinary shares at an issue price of 11 cents apiece. This represents a 21.9% discount to the 5-day volume weighted average price (VWAP) of 14.1 cents on 14 April 2021. It’s worth noting that the offer price is a slight markdown on today’s current share price drop to 11.5 cents.
The new ordinary shares to be issued represent 21.6% of the existing shares on issue. Under listing rule 7.1, Vimy will allocate 92 million shares to investors. In addition, the company will also use an extension – listing rule 7.1A to issue the remaining 76.2 million shares.
The proceeds will be used to deliver a number of strategic objectives at the Mulga Rock and Alligator River Projects. This includes infrastructure and road upgrades as well as exploration and field work testing. In addition, the funds received are expected to pay for general working capital costs and strengthen Vimy’s balance sheet.
Vimy managing director and CEO Mike Young commented:
The growing positive sentiment for nuclear clean energy has been the catalyst for this growth. Vimy is in a unique position to capitalise on the supply shortage by progressing the Mulga Rock Project into development, where our first stage AISC is less than the uranium spot price.
Share Purchase Plan offer
Complimenting the placement, Vimy will seek to raise $3 million from eligible shareholders through a SSP. The shares will be offered at the same price of the equity raise at 11 cents per share. It is expected that around 27.3 million new ordinary shares will be issued if fully taken up.
About the Vimy share price
Despite today’s fall, the Vimy share price has shot up over 150% in the past 12 months. When looking at year-to-date performance, the company’s shares are sitting on a gain of more than 40%.
Based on valuation grounds, Vimy has a market capitalisation of roughly $91.1 million with 778.6 million shares on issue.
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Motley Fool contributor Aaron Teboneras 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.