Why the Core Lithium (ASX:CXO) share price remains frozen today

The lithium producer’s shares are in a trading halt after the company made two announcements yesterday
The post Why the Core Lithium (ASX:CXO) share price remains frozen today appeared first on The Motley Fool Australia. –

The Core Lithium Ltd (ASX: CXO) share price remains frozen today after the shares entered a trading halt on Monday. This follows two new market announcements from the lithium producer after market close yesterday.

At Friday’s market close, Core Lithium shares were swapping hands for 36 cents apiece.

Core Lithium announces placement, inks Chinese deal

According to yesterday’s releases, Core Lithium has undertaken a fully underwritten institutional placement. The offer is seeking to raise $91 million through the issuance of 293 million new ordinary shares.

Under the placement, Core Lithium will price each of the shares at 31 cents apiece. This represents a 13.9% discount on the closing price on 6 August 2021, and a 2.4% discount on the 5-day volume-weighted average price.

Core Lithium stated it has also executed a binding offtake agreement with leading Chinese lithium supplier, Ganfeng Lithium. The company is considered one of the world’s largest lithium producers by capacity.

The deal will see Ganfeng Lithium buy 75,000 tonnes per annum of spodumene concentrate from the Finniss Lithium Project in the Northern Territory. The agreement is valid for 4 years.

Furthermore, Ganfeng Lithium will make an equity investment of $34 million to contribute towards the Finniss stage 1 development costs.

Core Lithium will issue approximately 100.5 million shares at 33.8 cents each for Ganfeng Lithium. However, the offtake agreement is subject to Chinese regulatory approvals, as well as approval from Core Lithium shareholders, by 31 October 2021.

In addition, the company will launch a share purchase plan (SPP) for retail shareholders at the same issue price. The company is hoping to raise an extra $15 million through the SPP. Shareholders can apply for up to $30,000 worth of Core Lithium shares when the offer opens on 13 August 2021.

What will the funds be used for?

The monies raised from the placement will be used to fund an array of initiatives. They include the following:

Upfront capital expenses at Finniss such as plant construction costs;
Environmental bond payments to the Northern Territory state government;
Drilling to accelerate reserve and resource growth; and
Working capital.

Core Lithium managing director Stephen Biggins commented:

The equity raising, including the offtake and equity investment by Ganfeng, represents a transformational moment for Core. We now have immediate certainty over Finniss Project funding and we remain on track to commence construction activities within the 2021 calendar year, ahead of anticipated first production in late 2022.

Core Lithium share price review

It has been an interesting year for Core Lithium shares. They have moved in circles for most of 2021 until recently shooting higher. The Core Lithium share price reached an 8-month high of 36.5 cents before it was halted yesterday.

Based on today’s price, Core Lithium has a market capitalisation of roughly $422.6 million, with over 1.1 billion shares outstanding.

The post Why the Core Lithium (ASX:CXO) share price remains frozen today appeared first on The Motley Fool Australia.

Should you invest $1,000 in Core Lithium right now?

Before you consider Core Lithium, you’ll want to hear this.

Motley Fool Investing expert Scott Phillips just revealed what he believes are the 5 best stocks for investors to buy right now… and Core Lithium wasn’t one of them.

The online investing service he’s run for nearly a decade, Motley Fool Share Advisor, has provided thousands of paying members with stock picks that have doubled, tripled or even more.* And right now, Scott thinks there are 5 stocks that are better buys.

*Returns as of May 24th 2021

More reading

Why is the Core Lithium (ASX: CXO) share price halted?
Why the Core Lithium (ASX:CXO) share price is charging 5% higher today
Why the Core Lithium (ASX:CXO) share price is advancing 6% 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!