Peninsula Energy shares are taking a tumble as investors digest the company’s impending share dilution.
The post Why the Peninsula Energy (ASX:PEN) share price is plummeting 8% today appeared first on The Motley Fool Australia. –
At the time of writing, the uranium mining company’s shares are down 8.11% to 17 cents.
What’s happening with the Peninsula Energy share price?
A major catalyst for the fall in today’s Peninsula Energy share price is an impending share dilution. According to today’s announcement, Peninsula Energy has completed a share placement to enable it to fund the purchase of natural uranium concentrates.
The company received commitments from new and existing international and domestic institutions, raising $13.4 million before costs.
According to the placement, about 89.3 million shares will be issued at a price of 15 cents apiece. This represents a 19% discount to Peninsula Energy shares’ last closing price of 18.5 cents on 25 May before they entered a trading halt.
Peninsula Energy will use its existing placement capacity to create the new shares. Under listing rule 7.1, this allows up to 15% of its total shares to be issued without shareholder approval.
The proceeds of the placement will be used to settle the purchase of 300,000 pounds of natural uranium concentrates. The company has entered into a binding agreement to purchase the concentrates at a price of US$31.35 per pound.
The settlement is due next month, with the product to be stored at the Cameco facility in Ontario, Canada.
Management said buying the uranium will support the company’s plans for its flagship Lance Project in Wyoming, United States.
Lastly, Peninsula Energy says it will launch a $2 million share purchase plan to eligible investors. Up to 13.3 million new shares will be created, with the monies being put towards corporate purposes and working capital.
Commentary from management
Peninsula managing director and CEO Wayne Heili said:
The acquisition of physical uranium underpins our focus on the transition of the Lance Project to a low pH ISR operation. Adding physical uranium to our balance sheet provides significant flexibilities and potential upside as we move towards the restart of operations.
Importantly, holding uncommitted uranium inventories at a time when there is a strong and continued push by the United States Government to support nuclear power generation and the domestic production of critical minerals like uranium, enhances our ability to successfully participate in expanding market opportunities.
The Peninsula Energy share price is up by around 50% since this time last year.
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