The Blue Star Helium Ltd (ASX: BNL) share price is plummeting today after coming out of a trading halt. This comes after the energy company announced it has successfully completed an equity raise.
During early afternoon trade, Blue Star Helium shares are swapping hands for 6.1 cents, down 7.58%.
Placement complete
Investors are heading for the hills, dumping Blue Star Helium shares as impending share dilution appears on the horizon.
According to its release, Blue Star Helium advised it has received firm commitments to raise $15 million from institutional and sophisticated investors. The strong support saw a number of new domestic and international customers be added to the company’s registry.
The well-supported placement will see Blue Star Helium create 267.86 million new ordinary shares at an issue price of 5.6 cents apiece. This represents an 11.7% discount to the 10-day volume weighted average price (VWAP) of 6.34 cents up to 27 October. In addition, this is a 15.2% reduction on Wednesday’s closing price of 6.6 cents (before going into a trading halt).
Under listing rule 7.1, Blue Star Helium will allocate 141.8 million shares to investors. Furthermore, the company will also use an extension – listing rule 7.1A to issue the remaining 126.1 million shares.
The proceeds will be used for helium exploration and development evaluation activities across its Las Animas County acreage in Colorado. This includes a number of strategic objectives such as expanding the helium exploration well and water well drilling activities, further key acreage leasing initiatives and production development studies.
What did management say?
Blue Star Helium managing director and CEO Trent Spry commented:
Following the grant of our Form 2A OGDP approval for the Enterprise 16#1 well, we are excited to be in the final phase of approval to commence drilling of our maiden helium exploration well. We expect to commence drilling of this well promptly upon receipt of the approved final permit to drill (Form 2), which is typically received within 30 days of submission which will happen shortly.
Drilling of the next water well (BBB#1) is also expected to commence in November. This well is located close to Blue Star’s Voyager prospect, which is positioned approximately six miles north from the Model Dome field. Our water well drilling program not only offers significant community relationship benefits but is also a source of valuable additional data with respect to helium prospectively across our acreage.
About the Blue Star Helium share price
Despite today’s fall, the Blue Star Helium share price has shot up by more than 70% in the past 12 months. When looking at year-to-date, the company’s shares are sitting on a gain of close to 40%.
Blue Star Helium has a market capitalisation of roughly $76.9 million with a tad over 1.26 billion shares on hand.
The post Here’s why the Blue Star Helium (ASX:BNL) share price is sinking 8% on Friday appeared first on The Motley Fool Australia.
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Motley Fool contributor Aaron Teboneras has no position in any of the stocks mentioned.
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