MEC’s Shares Plunged Over 11% Post Rights Issue Announcement

  • Apr 09, 2019 AEST
  • Team Kalkine
MEC’s Shares Plunged Over 11% Post Rights Issue Announcement

MEC Resources Limited (ASX: MMR) is a pooled development fund, listed on ASX. Under the PDF Act, MEC has the benefit of a reduced corporate tax rate (15%), and most shareholders receive tax-free capital gains and dividends. The Board of MEC is committed to maximising the effectiveness of its PDF status for the benefit of the company and its shareholders.

Today, on 9th April 2019, the company announced a pro-rata non-renounceable rights issue of up to 341,868,046 new fully paid ordinary shares in the company, under which its eligible shareholders will be offered one fully paid ordinary share in the company (New Share) for every one fully paid ordinary share in the company held as of 5:00 pm AEST on Friday 12 April 2019 (Record Date). The new shares will be issued at an issue price of $0.005 per share, with any fractional entitlements being rounded down. The rights issue will raise up to $1.7 million before cost.

The company made an offer of a 1 for 1 pro-rata non-renounceable rights at $0.005 per share to raise up to $1,709,340. The offer is open to eligible shareholders. There is no minimum subscription amount under the offer.

The offer will close at 5:00 PM (Australian Eastern Standard Time) on 3rd May 2019. Valid acceptances must be received before that time; however, the company has a right to vary the date.

The company will use the funds raised under the offer primarily to expand and diversify the company’s asset base in accordance with its approved investment mandate, and/or as modified from time-to-time following any necessary approval from AusIndustry, ASX or shareholders, to support MEC investee, Advent Energy, in any additional costs it may incur toward planned exploration works within its petroleum titles and for working capital purposes.

On the mineral exploration and technologies front, the number of new energy storage projects globally have more than doubled in the first half of 2018 compared to the year earlier. This is significantly contributing to the increasing interest in demand for battery metals like nickel, lithium and vanadium.

The UK’s new capacity increased 441% from the first half of 2017 to the first half of 2018. China’s new energy storage projects climbed 127% in the first half of 2018, led by grid-side energy storage. Lithium-ion technologies are still the dominant energy storage technology. While lithium-ion is a favoured technology, other technologies are being considered for grid-scale energy storage, such as nickel cadmium, vanadium redox flow, zinc air, sodium-ion, lithium-ion, and lead-acid. These systems are intended to store excess power, including from renewable sources, for use during expensive peak demand periods.

On the price-performance front, the stock of MEC Resources Limited, at market close on 9th April 2019, was trading at A$0.008, a decrease of 11.11% during the day’s trade with a market capitalisation of A$3.08 million. The stock has generated a negative YTD return of 30.77% with returns of -25.0% and 12.50% over the past three months and one-month period, respectively. Its 52-week high price stands at A$0.024, and 52-week low price stands at A$0.007, with an average trading volume of 124,637.


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