The Pilbara Minerals Ltd (ASX: PLS) share price remains in a trading halt at $0.88 per share today after the company announced a $240 million equity raising to support a large acquisition.
Why is the Pilbara Minerals share price in a trading halt?
All eyes are on Pilbara Minerals after the ASX 200 miner entered a trading halt on Friday.
The company has received creditor approval to raise capital for its planned US$175 million acquisition of Altura Project. Pilbara Minerals recently entered into a share sale agreement with Altura Mining Limited and its administrators to acquire all shares of Altura Lithium Operations Pty Ltd (ALO).
Pilbara’s deed of company arrangement (DOCA) received ALO creditors approval with all parties signing off. That has cleared the way for Pilbara Minerals to acquire the neighbouring site for US$175 million.
The acquisition is contingent on Pilbara raising A$240 million in equity to support the transaction. That has put the Pilbara Minerals share price in a trading halt ahead of the planned equity raising.
The $240 million comprises a $119 million placement to Australian Super and Resource Capital Fund VII L.P. alongside a $121 million accelerated non-renounceable entitlement offer.
Pilbara’s 1-for-7.6 fully underwritten offer will see the miner issue 337 million new shares. The group has proposed price of A$0.36 per new share as part of the equity raise.
What is the Altura Project?
The Altura Project produces hard rock spodumene concentrate next to Pilbara Minerals’ existing Lithium-Tantalum Project. The operation produced 181,263 wet metric tonnes of spodumene concentrate in the year ended 30 June 2020.
Pilbara believes the acquisition will enhance its scale and provide tangible synergies of A$18 million to A$27 million per year. On top of that, management is hoping for greater flexibility, speed to market and increased market relevance.
The Pilbara Minerals share price has rocketed 183.9% in 2020 and boasts a market capitalisation of $1.95 billion.
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More reading
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- The 13 ASX shares that could have doubled your money in 2020
- Are ASX lithium shares making a comeback?
Motley Fool contributor Ken Hall has no position in any of the stocks mentioned. 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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