Why Mandrake Resources (ASX: MAN) share price drops 6%
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the Mandrake Resources Ltd (ASX: MAN) The stock price is having a dismal day following an update on its capital increase.
By mid-afternoon, shares of the mining exploration and development company were down 6.25% to 22.5 cents.
What did Mandrake announce?
Investors scramble to sell shares in Mandrake Resources as the company is on the verge of diluting existing shareholder value.
According to its press release, the mining company announced that it had $ 12 million in firm commitments by way of investment. The offer saw strong demand from institutional and sophisticated investors.
In total, 60 million new common shares will be issued at a price of 20 each to each participating investor. This represents a discount of around 12.3% from the 15-day Volume Weighted Average Price (VWAP).
Mandrake Resources 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 company will use an extension of the listing rule (7.1A) to issue the remaining shares with the additional capacity of 10%.
The proceeds of the placement will allow Mandrake Resources to begin an immediate drilling program on the Newleyine PGE-Ni-Cu target. In addition, the company will conduct a geological and geophysical assessment of the area.
Mandrake Resources will also use the funds to undertake another reverse circulation (RC) drilling at the Berinka Au-Ag-Cu project. It should start around July or August of this year.
It is expected that the shares of the offering will be settled and allocated to the investor portfolios around June 17, 2021.
Mandrake Resources Managing Director James Allchurch said:
We are pleased to welcome new institutional and sophisticated investors to the shareholder register. The strong response received for this capital increase reflects the potential of our asset portfolio, in particular the imminent drilling campaign on the Newleyine project.
About the Mandrake Resources share price
The Mandrake Resources share price has been one of the top performers in ASX, exploding over 900% in the past 12 months. The company’s shares soared on positive investor sentiment, particularly in copper.
Mandrake Resources has a market capitalization of approximately $ 81 million, with approximately 363 million shares currently on its register.