Syrah Resources Ltd (ASX: SYR) shares are crashing deep into the red on Friday.
In morning trade, the ASX mining stock is down 24% to a multi-year low of 11 cents.
Why is this ASX mining stock crashing?
Investors have been selling the graphite producer’s shares after it raised capital for the fourth time in four years.
According to the release, Syrah has successfully completed the institutional component of a fully underwritten pro rata accelerated non-renounceable entitlement offer.
The ASX mining stock advised that the institutional entitlement offer was supported by existing and new institutional shareholders, raising approximately A$44 million (US$30 million) at a fixed price of 10.5 cents per new share. This represents a 27.6% discount to its last close price.
Approximately 88% of entitlements available to institutional shareholders in the institutional entitlement offer were taken up by existing shareholders.
The new shares that were not taken up by eligible institutional shareholders and ineligible institutional shareholders were fully allocated to new investors and major shareholder AustralianSuper.
Syrah will now push ahead with retail component of the equity raising, which is fully underwritten and expected to raise approximately A$61 million (US$42 million).
Funding update
In addition, the ASX mining stock revealed that it has received non-binding strategic funding proposals from US International Development Finance Corporation, the US Department of Energy and AustralianSuper to reset Syrah’s balance sheet.
Under the proposals, a substantial portion of Syrah’s debt would be converted or exchanged for new Syrah shares and convertible loan notes.
This would boost pro forma liquidity to up to US$198 million and there would be no cash interest or principal repayments for the next three years.
Combined with its equity raising, Syrah will be well-positioned for the ramp-up of Balama to targeted production levels and Vidalia working capital to achieve commercial sales.
Syrah’s managing director and CEO, Shaun Verner, commented:
Following the Equity Raise and the Strategic Funding Proposals, Syrah will have a robust balance sheet with pro-forma liquidity of ~US$198 million to support ramp up at Balama and Vidalia and provide a pathway to near term sustainable cash flow generation.
The strong alignment with the US International Development Finance Corporation, the US Department of Energy and AustralianSuper underscores the strategic importance of Syrah’s assets in developing a secure, ex-China supply chain for critical battery materials. The strategic proposals and funding position Syrah to advance our operations as the global graphite and anode materials markets evolve.
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