The Liontown Resources Limited (ASX: LTR) share price missed out on the strong gains being made by the share market…
The post Why the Liontown Resources (ASX:LTR) share price is in a trading halt appeared first on The Motley Fool Australia. –
The Liontown Resources Limited (ASX: LTR) share price missed out on the strong gains being made by the share market on Monday.
This is because the lithium explorer requested a trading halt before the market open this morning.
Why is Liontown Resources share price in a trading halt?
According to the release, Liontown Resources requested the halt pending an announcement in relation to a capital raising.
The release explains that management expects to make the announcement prior to the commencement of trading on Wednesday, with the Liontown Resources share price remaining halted until then.
This certainly is an opportune time for the company to raise funds. With lithium miners such as Orocobre Limited (ASX: ORE) recently revealing very strong lithium price increases, the lithium sector has been on fire.
In fact, prior to its trading halt, the Liontown Resources share price had doubled in value in 2021 and was trading within an inch of its record high.
Why is Liontown Resources raising funds?
Liontown Resources has yet to reveal to the market what it is aiming to raise and why.
However, the AFR is reporting that the company is trying to raise $50 million at 76 cents per new share. This represents a discount of 10.1% to the Liontown Resources share price at the close of play on Friday.
The report advises that the proceeds from the capital raise will go toward accelerating the construction and production of its flagship Kathleen Valley Tantalum Project. Management reportedly sees an opportunity to capitalise on an expected market deficit in the lithium sector. As a result, it is aiming to deliver its first production 12 months ahead of schedule.
In addition to this, the company is believed to be using some of the funds to support further exploration and drilling of its hard rock lithium Buldania site.
Liontown Resources last tapped the market for funds in October. At that point, the company raised $12.5 million at 23 cents per new share.
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Motley Fool contributor James Mickleboro 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.