Argosy’s Shares Slipped Over 17% On ASX Post Capital Raising Announcement Through Rights Issue
Argosy Minerals Limited (ASX: AGY) has a stake of 77.5% in the Rincon Lithium Project in Argentina currently. The company focusses on its flagship Rincon Lithium Project, which has high potential considering its location within the world-renowned “Lithium Triangle.” It is the host to the largest lithium resource of the world and has a strategy involving progressing development towards the production of LCE product. The company’s objective is to build a sustainable lithium production, highly leveraged to the forecast growth in the lithium-ion battery sector.
The company today on 8th March 2019, has announced a renounceable rights issue where it will raise up to $6.156 million approximately. The offer is partially underwritten by CPS Securities Pty Ltd to $3 million.
The eligible shareholders will be offered the securities based on one new share for every fifteen existing shares held on the record date on 13th March 2019, at an issue price of $0.10 per share, with one attached listed option for every three shares issued. The options are however exercisable at twenty cents, with an expiration date on 31st March 2022.
The rights issue price represents an opportunity for existing shareholders to purchase shares at a 23% discount to the company’s 10-day volume weighted average share price of $0.13 per share. The theoretical ex-rights price per share is $0.128.
The shareholders of the company will get an opportunity to apply for additional securities over and above their entitlement. The issue is renounceable and tradable, so the shareholders may not wish to take up their rights will be able to sell their rights or others can increase their guaranteed entitlement by the purchase of additional rights on-market.
The proceeds from the offer will be utilized to progress next stage development and approval work at the Rincon Lithium project, payment for the completion of recent tenement acquisitions and cost of the offer and working capital.
The Managing Director of the company, Mr. Jerko Zuvela said that the proceeds of the Rights Issue will help the company to build on the excellent progress made by the company in the past year and will continue to engage with potential Asian strategic partners for the full commercial development of the Rincon Lithium Project. The company is of the opinion that the rights Issue represents a good outcome for the existing shareholders and provide them with the opportunity to participate in the capital raising on very attractive terms.
On the price-performance front, the stock of Argosy Minerals Limited is trading at $0.115 (AEST 04:00 PM on 8th March 2019) with a sharp decline of ~17.86% during the day’s trade and with a market capitalization of ~$129.29 million. The stock has generated negative returns of 37.78% and 22.22% over the past six months and three months period; however, the last one-month return is 3.70%. It has a 52-week high price of $0.380 and a 52-week low price of $0.015 with an average trading volume of ~1.06 million.
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