The Core Lithium Ltd [ASX:CXO] share price is surging after CXO raised $91 million through a successful placement.
At the time of writing, the CXO share price is trading at 39 cents, up 8.33%.
Over the course of 12 months, CXO shares have gained over 750%.
CXO’s $91 million placement
Investors are bidding up CXO stock today as the lithium producer prepares to fund its Finniss Lithium Project.
The $91 million will be raised through an institutional placement. This offer was placed to domestic and global investors at an issue price of 31 cents per share.
The overall issue price given to investors 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.
The company will issue 293 million new ordinary shares.
CXO’s primary goal is to develop its Finniss Lithium Project with the help of $34 million equity investment from Ganfeng Lithium Co Ltd, backed by today’s $91 million placement.
The funding will cover upfront capital expenses like plant construction and other mine establishment costs.
Apart from this, Core Lithium aims to make an environmental bond payment to the Northern Territory government.
Core Lithium will also allocate this money for drilling programs that will boost reserve and resource growth.
To top this all off, a share purchase plan (SPP) is on offer to raise an additional $15 million.
The SPP applies to retail investors at the same price as the placement. The closing date of the SPP is 2 September 2021.
Core Lithium Managing Director Stephen Biggins was pleased with the outcome of their efforts:
‘We are very pleased with the overwhelming support received in the Placement in this transformational moment for Core.
‘We thank our existing shareholders for their ongoing support and welcome a number of new, high-quality institutional investors to our register, supporting our journey towards being Australia’s next lithium producer
‘Together with the Ganfeng equity investment and the share purchase plan, we are now fully funded to complete Stage 1 development of Finniss and have the financial flexibility to assess future growth initiatives.
‘With the support of our high-quality shareholder base, we look forward to executing on our plan to commence anticipated first production in late 2022.’
Buying interest in CXO shares has grown since 9 August when the company first made an official announcement regarding a transformational equity raise of up to $140 million.
CXO share price outlook
Today’s news will likely put CXO’s rivals on notice, as project finance is a critical part of a junior lithium company’s prospects.
Today’s $91 million placement, backed by $34 million equity investment from Ganfeng Lithium, and share purchase plan for an additional $15 million will likely help the Finniss Lithium Project launch in full swing.
The war chest CXO now possesses will likely excite bullish investors as the funds give the company more certainty regarding its exploration and construction costs.
Bullish investors will also likely point to the positive market outlook for CXO and other emerging lithium producers.
Demand for the ‘white metal is increasing globally as the automotive industry switches to electric vehicles.
So, if you want to read more about the lithium industry and lithium stocks, then I recommend checking out our free 2021 lithium report.
For Money Morning