The IGO Limited (ASX: IGO) share price has blasted up 18% early today as the miner returns to trade for the first time since Monday. The IGO share price is trading higher at $6.01 at the time of writing.
Why is the IGO share price rocketing up?
Shares in the Aussie company have been in a halt this week after unveiling a US$1.4 billion (A$1.9 billion) acquisition. IGO will acquire a 49% stake in Tianqi Lithium Energy Australia Pty Ltd from China-listed Tianqi Lithium Corporation.
IGO’s venture into lithium meant the company needed to raise some significant funds from shareholders. IGO announced a $766 million capital raise comprising an institutional entitlement offer and an institutional share placement.
IGO today announced the placement raised approximately A$446 million, while the entitlement offer raised $261 million. The offer price represented a 9.7% discount to IGO’s 7 December 2020 closing price of $5.095 per share.
The diversified mining and exploration company’s shares are set to return to trade after what has been a busy period. The IGO share price has slumped 17.3% lower in 2020 having started the year at $6.17 per share.
All eyes will be on the Aussie mining group’s shares after the bold strategic move announced earlier in the week.
What’s the deal with IGO’s acquisitions?
The $1.9 billion price tag will net IGO a 24.99% indirect interest in the Greenbushes Lithium Mining and Processing Operation (Greenbushes) and a 49% indirect interest in the Kwinana Lithium Hydroxide Plant (Kwinana).
This represents a bold push into the potentially lucrative lithium market with IGO tilting towards the sector for future growth.
The IGO share price has climbed 121.5% in the last 5 years with a current market capitalisation of $3.01 billion. Prior to the open, the mining group’s shares were yielding 2.16% p.a. with a 19.5 price to earnings (P/E) ratio.
Foolish takeaway
The IGO share price will be one to watch upon its return to trading today, particularly the case given a recent price target upgrade from leading broker, Jarden.
There are a number of other S&P/ASX 200 Index (ASX: XJO) shares on the move in early trade including CSL Limited (ASX: CSL) after the company scrapped further trials of a potential COVID-19 vaccine candidate this morning.
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More reading
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- CSL (ASX:CSL) share price on watch after terminating COVID-19 vaccine trial
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- 5 things to watch on the ASX 200 on Friday
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Ken Hall has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of CSL Ltd. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.
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