In late morning trade, the S&P/ASX 200 Index (ASX: XJO) is fighting hard to finish the week on a positive note. At the time of writing, the benchmark index is up almost 0.1% to 7,516.5 points.

Four ASX shares that are climbing more than most today are listed below. Here’s why they are racing higher:

AnteoTech Ltd (ASX: ADO)

The AnteoTech share price has jumped 14.5% to 21.2 cents. This morning the surface chemistry company announced a distribution agreement with UC Biosciences to dispense its EuGeni products in the Philippines. This includes a reader platform and COVID-19 antigen Rapid Diagnostic Test. The initial term will be three years, which is renewable year-on-year after the initial period has elapsed.

BetMakers Technology Group Ltd (ASX: BET)

The BetMakers share price has stormed 9% higher to $1.14. Investors have been buying the betting technology company’s shares after it revealed that fixed odds wagering on horse races through a fixed odds wagering system is now legal in the state of New Jersey. This is a big positive for the company as it has already secured an exclusive 10-year agreement to deliver and manage fixed odds thoroughbred horse racing into the state.

News Corporation (ASX: NWS)

The News Corp share price is up 5% to $34.26. This follows the release of its full year results for FY 2021. According to the release, the media giant reported a 4% increase in revenue to US$9.4 billion and a net profit of US$389 million. The latter compares to a US$1.6 billion net loss in the prior corresponding period.

Vulcan Energy Resources Ltd (ASX: VUL)

The Vulcan share price has continued its positive run and is up a further 11% to $12.79. Investors have been buying this lithium developer’s shares this week following the release of a couple of very positive announcements. One was a partnership with Renault and the other was that its Zero Carbon Lithium Project will produce negative carbon emissions.

The post Why AnteoTech, BetMakers, News Corp, & Vulcan shares are racing higher appeared first on The Motley Fool Australia.

More reading

• Why the AnteoTech (ASX:ADO) share price is racing 13% higher today
• The News Corp (ASX:NWS) share price hits 52-week high on FY21 earnings
• BetMakers (ASX:BET) share price jumps 7% after landmark achievement
• Why the Vulcan (ASX:VUL) share price is running hot in August
• The Betmakers (ASX:BET) share price is up 53% so far in 2021. Here’s why

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and has recommended Betmakers Technology Group Ltd. The Motley Fool Australia has recommended Betmakers Technology Group Ltd. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

from The Motley Fool Australia https://ift.tt/3s9uFhf

Motley Fool Australia Chief Investment Officer Scott Phillips joined Nine’s Late News on Thursday night to discuss Nick Scali Limited (ASX: NCK)’s stunning results, the companies that pushed the ASX to a new record, and the ripples from Afterpay Ltd (ASX: APT)’s $39b deal.

The post Banks, NIB and Nuix share prices rise. Nick Scali flying. Scott Phillips on Nine’s Late News appeared first on The Motley Fool Australia.

More reading

• Afterpay (ASX:APT) share price surges as Square hits record highs
• How owning too much Afterpay (ASX:APT) was our biggest regret
• 2 leading ASX dividend shares that just reported more growth in FY21
• ASX 200 rises, Nick Scali falls, Pinnacle jumps
• Why Emerge Gaming, Imugene, Mesoblast, & Nick Scali shares are dropping

Motley Fool contributor Scott Phillips has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and has recommended AFTERPAY T FPO. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has recommended Nuix Pty Ltd. The Motley Fool Australia owns shares of and has recommended AFTERPAY T FPO. The Motley Fool Australia has recommended NIB Holdings Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

from The Motley Fool Australia https://ift.tt/3fDDavJ

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

Facebook (NASDAQ: FB) CFO Dave Wehner recently warned investors of an impending slowdown in the company’s revenue growth in the back half of 2021. After reporting a 56% increase in ad revenue versus the second quarter last year, Wehner reminded investors that April through June of last year were very uncertain times for marketers, who pulled back on ad spending. As we enter the back half of the year, the comparable periods from 2020 are much tougher, and revenue growth will decelerate.

Here’s why investors shouldn’t be too concerned about Wehner’s comments.

A look back at 2020

Looking back at 2020 and the first half of 2021 can give investors a better idea of where Facebook is going.

In the second quarter last year, Facebook’s ad impressions increased 40% while average ad prices declined 28%. Naturally, that presents a tough comparison for ad impression growth, but an easy prior-year number to compare ad prices. Indeed, Facebook’s second-quarter ad impressions rose just 6%, but ad prices jumped 47%.

Here’s what Facebook’s advertising growth looked like in the back half of 2020:

Metric	Q3 2020	Q4 2020
Ad impression growth	35%	25%
Average ad price growth	(9%)	5%

Data source: Facebook quarterly earnings calls.

As you can see, ad prices were still relatively muted through the back half of the year. While still better than the average ad price declines in the first and second quarters of 2020, the growth wasn’t anything like investors were used to. At the same time, ad impression growth declined as pricing improved. 

Not counting on ad impression growth

Wehner’s outlook basically removes the ad impression growth variable from the revenue growth equation. He said he believes the engagement bump from the COVID-19 pandemic, which was particularly pronounced in the high-value North America region, presents a challenge for 2021 engagement growth. Furthermore, the increasing shift from feed to video products like Stories, Reels, and Facebook Watch will decrease impressions.

Even if you remove the ad impression growth from the revenue growth projections, ad prices should still see notable increases in the back half of the year due to strong marketer demand. Simply look at the revenue outlooks for Facebook’s competitors for a barometer of demand in the third quarter. Twitter expects revenue growth in the mid-30% range, and Snap expects revenue to rise 58% to 60%.

That said, Facebook should be able to grow ad impressions. First of all, it’s still increasing its daily active user counts by 7% and 12% across Facebook and its entire family of apps, respectively. Second, it’s boosting ad loads in its video products like Reels, which is accounting for significant amounts of engagement on Instagram. Reels is still in the very early stages of monetization, but it’s ramping up quickly. That factor, combined with user growth, makes modest impressions growth feasible.

With continued strong demand for digital advertising and just a slight increase in impression growth, the FAANG stock should see its ad revenue continue to rise at its pre-pandemic pace in the upper-20% range. Yes, that’s a slowdown from the first half of the year, but it’s still very strong growth for a company the size of Facebook.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

The post Why Facebook’s outlook for rest of 2021 doesn’t scare me appeared first on The Motley Fool Australia.

More reading

• Why Facebook stock moved higher on Wednesday
• 3 key takeaways from Facebook’s earnings report
• Facebook is on a collision course with Shopify
• Facebook (NASDAQ:FB) share price sinks on growth slowdown warning
• Here’s our secret software ASX share that just keeps giving: analyst

Adam Levy owns shares of Facebook. Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to its CEO, Mark Zuckerberg, is a member of The Motley Fool’s board of directors. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and has recommended Facebook and Twitter. The Motley Fool Australia has recommended Facebook. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

from The Motley Fool Australia https://ift.tt/3ClpYp6

The Eroad Ltd (ASX: ERD) share price is jittery today after the company announced the completion of its share purchase plan.

The company’s NZ$16.1 million share purchase plan has closed oversubscribed.

Earlier this morning, the Eroad share price rose 0.67% to $6.00. However, at the time of writing, the shares are swapping hands for $5.93, a fall of 0.5% on the previous closing price.

Let’s take a closer look at today’s news from the transport technology company.

Oversubscribed share purchase plan

The Eroad share price is wobbling after it received applications for NZ$43 million worth of shares for its NZ$16.1 million share purchase plan.

Under the plan, eligible shareholders were offered up to $30,000 worth of new shares for $5.30 apiece. As a result, the company has decided to accept oversubscriptions of NZ$3.9 million to round out the share purchase plan at NZ$20 million.

The share purchase plan is part of a capital raise helping fund the company’s acquisition of Coretex Limited. Eroad will be paying NZ$157.7 million for the telematics vertical specialist provider.

Eroad already raised NZ$64.4 million in the first part of its capital raise. The first stage of the capital raise happened in July. It offered shares for $5.25 apiece – a 9.2% discount on the shares’ previous closing price.

The Eroad share price gained 6.6% on the back of news of the acquisition and capital raise.

It’s expected the acquisition will be finalised in the second half of the 2022 financial year.

Commentary from management

Eroad’s chair Graham Stuart commented on the news driving the company’s share price today:

We are delighted with the support we have received from shareholders since we announced the acquisition of Coretex. We have seen strong support through the many conversations we have had with shareholders, the 100% shareholder vote in favour of the transaction and the oversubscribed placement and share purchase plan.

Eroad share price snapshot

It’s been a good year for the Eroad share price. It has gained 26% since the start of 2021. It has also increased by 49% since this time last year.

The company has a market capitalisation of around $556 million, with approximately 81 million shares outstanding.

The post Eroad (ASX:ERD) share price wobbles after oversubscribed share purchase plan appeared first on The Motley Fool Australia.

More reading

• EROAD (ASX:ERD) share price slumps on opening of SPP
• EROAD (ASX:ERD) share price drives higher following transformational acquisition
• Why is the Eroad (ASX:ERD) share price halted today?

Motley Fool contributor Brooke Cooper has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and has recommended EROAD Limited. The Motley Fool Australia owns shares of and has recommended EROAD Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

from The Motley Fool Australia https://ift.tt/3ir3ScL

The Coles Group Ltd (ASX: COL) share price has been trending higher in the past few weeks, rallying to a 7-month high of $18.12.

This follows a resurgence of COVID-19 cases across Australia and a sweep of lockdowns across major cities and now the Hunter region of NSW.

What can lockdowns in the past tell us about the Coles share price?

Did the Coles share price benefit from previous lockdowns?

Coles rallied strongly after the March 2020 sell-off. Shares in the leading supermarket surged 26% from $15.27 in late May to all-time highs of $19.26 by 13 August.

Despite finding success amid lockdowns, Coles shares crashed on two occasions in the August 2020 and February 2021 reporting seasons.

On 18 August, the Coles share price edged 0.9% lower to $18.71 following the release of its full-year FY20 results. Over the next couple of weeks, Coles shares lost another 9.78% to $16.88 by 9 September.

A similar situation took place when the company released its 1H FY21 results on 17 February. The Coles share price tanked 5.3% to $17.20.

The harsh selling continued for the next few days, dragging it to a 10-month low of $15.32 by 26 February.

In the results, Coles was very cautious about its outlook, with management saying:

Depending on COVID-19, vaccine roll out and efficacy, and other factors, sales in the supermarket sector may moderate significantly or even decline in the second half of FY21 and into FY22. Coles will be cycling elevated sales from COVID-19 in Supermarkets late in the third quarter, for the remainder of the second half, and most of FY22.

Retail trade figures point to strong supermarket sales

Retail turnover figures from the Australian Bureau of Statistics (ABS) have highlighted a particularly strong performance from supermarkets.

In May, the ABS reported an 0.1% increase in retail trade turnover, seasonally adjusted.

Despite the small increase, the ABS noted that Victoria experienced a 4.0% increase in food retailing, driven by strong turnover figures from supermarkets.

The latest figures from June flag a 1.8% month-on-month decline for retail turnover.

Despite the decline, the ABS reported a 1.5% increase in food retailing within industry subgroups, including supermarkets.

Coles share price snapshot

The Coles share price is down 2.05% year-to-date, a significant improvement on its -17% year-to-date return in late February.

Investors should keep an eye out for the company’s full-year FY21 results, which are scheduled for release on Wednesday, 18 August.

The post How does the Coles (ASX:COL) share price perform during lockdowns? appeared first on The Motley Fool Australia.

More reading

• Analysts name 2 growing ASX dividend shares to buy
• The Coles (ASX:COL) share price has gained 3% this week. Here’s why
• Here’s why the Coles (ASX:COL) share price is up 7% this last month
• Top broker names 2 ASX shares for retirees
• ASX 200 Weekly Wrap: ASX grinds to a halt following new all-time high

Motley Fool contributor Kerry Sun has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended COLESGROUP DEF SET. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

from The Motley Fool Australia https://ift.tt/3lAPkcL

The Vital Metals Limited (ASX: VML) share price has leapt higher this morning after a bumper production update from the rare earths producer.

At the time of writing, the Vital Metals share price is up 5.56%, trading at 5.7 cents.

Why is the Vital Metals share price climbing higher?

Shares in the Aussie-Canadian miner shot more than 9% higher at Friday’s open before paring back some of those gains. That share price swing comes after Vital Metals provided an update on its Nechalacho rare earths project in Northwest Territories, Canada.

The ASX company has now completed its first month of rare earths production at the site. Vital Metals Managing Director Geoff Atkins said, “We are really pleased with the way our operations are ramping up at Nechalacho, and the exciting developments we’ve made with ore sorter operation and mineralisation at the North T pit wall during July.”

Notably, Vital Metals said mining at the pit has intersected high-grade rare earth oxide (REO) mineralisation in the northern edge of the wall. The company said this new material could allow Vital to potentially expand the North T pit beyond the existing mine plan.

Today’s update impressed investors who have snapped up shares. The Vital Metals share price leapt more than 5% at the start of trade following the news.

Vital Metals said its ore sorter has exceeded expectations thus far. The Nechalacho ore sorter commenced processing in July with high grade product output better than expected.

The production update is the second positive update from Vital Metals this week. Outstanding first-pass assay results from the Nechalacho project saw the ASX share jump higher on Tuesday. That included news that its Tardiff Zone 2 and 3 could significantly extend the project’s mine life.

These recent gains mean that the Vital Metals share price has now climbed 90% higher in 2021 with a current market capitalisation in excess of $250 million.

The post Vital Metals (ASX:VML) share price leaps 6% on production update appeared first on The Motley Fool Australia.

More reading

• Here’s why the Vital Metals (ASX:VML) share price is flying higher today

Motley Fool contributor Ken Hall has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. 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.

from The Motley Fool Australia https://ift.tt/3fBOb0G

The Resmed CDI (ASX: RMD) tumbled even as management unveiled a double-digit increase in quarterly revenue and a bigger dividend.

But that wasn’t enough to save the sleep-treatment device maker. The ResMed share price crashed by over 3% to $36.06 in early trade.

ResMed share price is worst performer

This makes it the worst performer on the S&P/ASX 200 Index (Index:^AXJO) at the time of writing.

That’s even worse than ASX gold miners, which dominated the rest of the bottom ranks due to the weak gold price.

The Perseus Mining Limited (ASX: PRU) share price, Ramelius Resources Limited (ASX: RMS) and Northern Star Resources Ltd (ASX: NST) are right behind ResMed.

Profit and dividend growth

ResMed posted a 14% uplift in fourth quarter revenue compared to the same time last year to US$876.1 million.

This means its FY21 full year revenue will be 8% ahead of the previous year at US$3.2 billion.

The medtech giant also upped its quarterly dividend by 8% to US42 cents a share. Not that this matters much as investors don’t buy the ResMed share price for its dividends.

Good news overshadowed by margin squeeze

But the news hasn’t gone down well with investors as ResMed’s margins are under pressure. Its non-GAAP gross margin fell 260 basis points (bps) to 57.3%. This dragged its full year margin down 70 bps to 59.1%.

ResMed said this is mainly due to an unfavourable product mix. Sales of lower-margin Sleep devices contributed more to group revenue this time round.

Further, lower average selling prices and foreign currency movements also weighed on margins. However, the foreign exchange “drag” bolstered ResMed’s top line. So, I can only surmise that currency movements didn’t have as big an impact on margins than the first two factors.

Profit takers hit the ResMed share price

Another reason why the ResMed share price came under pressure may have something to do with its 41% surge over the past year.

Shareholders sitting on strong returns would be looking for any excuse to lock in some profits. A margin squeeze is as good as any.

The fact that ResMed didn’t offer much in the way of an outlook also made the profit-taking decision that much easier.

Outlook failed to inspire

“Looking ahead, we are confident in our ability to grow steadily through our fiscal year 2022 and to deliver for all our stakeholders,” said ResMed’s chief executive, Mick Farrell.

“We’re driving accelerated adoption of digital health solutions in sleep apnea, COPD, and out-of-hospital care, accelerating our ResMed 2025 strategy.”

After a big run-up in the shares, investors will need more than assurances of steady growth to keep pushing ResMed higher – at least for now.

The post Why the ResMed (ASX:RMD) share price slumped even as its profit jumped appeared first on The Motley Fool Australia.

More reading

• Afterpay (ASX:APT) share price surges as Square hits record highs
• How owning too much Afterpay (ASX:APT) was our biggest regret
• ResMed (ASX:RMD) share price on watch after beating expectations in FY21
• 5 things to watch on the ASX 200 on Friday
• ASX 200 rises, Nick Scali falls, Pinnacle jumps

from The Motley Fool Australia https://ift.tt/3yvpFFP

The AnteoTech Ltd (ASX: ADO) share price is breaking its negative streak this week to surge higher today.

This comes after the nanotechnology company announced that it has partnered with in-vitro diagnostic products supplier, UC Biosciences Inc. (Unison).

At the time of writing, AnteoTech shares are fetching 21 cents, up 13.89%.

AnteoTech expands market access

Investors appear pleased with the company’s latest developments, sending AnteoTech shares higher.

According to its release, AnteoTech advised it has signed a distribution agreement with Unison to dispense its EuGeni products in the Philippines. This includes a reader platform and SARS-CoV-2 (COVID-19) antigen Rapid Diagnostic Test (RDT).

Under the agreement, Unison will become the exclusive distributor for EuGeni sales into the Philippines.

The initial term will be 3 years, which is renewable year-on-year after the initial period has elapsed.

Should government or large enterprises present tender opportunities, both companies will work together on a case-by-case basis.

The distribution agreement came into effect on 5 August 2021.

AnteoTech CEO, Derek Thomson welcomed the new collaboration, saying:

I am very pleased to welcome Unison as a distribution partner. Unison has over 40 years’ experience as a distributor, with a strong sales network.

The Philippines has a population of over 100 million people and have used rapid antigen testing as a tool within their pandemic response.

With Unison coming on board, we have expanded our distribution network and coverage across South East Asia.

Over the coming weeks we will work with Unison to ensure we have the required regulatory approvals in place to commence selling into the Philippines market.

About the AnteoTech share price

Over the past 12 months, AnteoTech shares have roared beyond a 200% increase, with year-to-date gains sitting at 86%. The AnteoTech share price hit a 52-week high of 49.5 cents before coming back down.

AnteoTech has a market capitalisation of roughly $394 million with 1.97 billion shares on its books.

The post Why the AnteoTech (ASX:ADO) share price is racing 13% higher today appeared first on The Motley Fool Australia.

More reading

• Ellume is making news and these ASX shares are surging, again
• AnteoTech (ASX:ADO) share price lifts as Ellume US sales ramp-up
• The 5 best ASX shares of FY21 revealed
• The 5 best performing ASX healthcare shares of FY21, did yours make the cut?

Motley Fool contributor Aaron Teboneras has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. 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.

from The Motley Fool Australia https://ift.tt/2VAMR7b

The News Corporation (ASX: NWS) share price hit a new yearly benchmark on Friday morning after the international media company reported its FY21 earnings.

At the time of writing, News Corp shares are selling for $34.52 – up 5.79%. The S&P/ASX 200 Index (ASX: XJO), meanwhile, is flat.

Let’s take a closer look at the results.

News Corp share price increases on first profit in a year

• Revenues increased 4% to $9.4 billion.
• Net profit of $389 million compared to $1.6 billion net loss in prior corresponding period (pcp).
• Earnings before interest, taxes, depreciation, and amortisation (EBITDA) was $1.3 billion. In the pcp it was $1 billion.
• Earnings per share (EPS) of 56 cents as opposed to a $2.16 loss in the prior year.

What happened in FY21 for News Corp?

There have been several major stories that have impacted the News Corp share price in FY21.

One such story was when it reportedly rejected an approach from an unnamed corporation for its Australian subscription television business Foxtel. Foxtel had a 40% growth in paid subscribers in the financial year.

Another story was the deal News Corp, among other ASX media companies, made with tech giants Facebook Inc (NASDAQ: FB) and Alphabet Inc (NASDAQ: GOOGL) (NASDAQ: GOOG). The two Silicone Valley behemoths agreed to pay News Corp for stories shared on their platform. The deal came after intervention from the Australian government and its legislated Media Bargaining Code.

At first, Facebook and Google were so opposed to the code it initially blocked all Australian news from being shared on its platform for five days. The tech companies only dropped the news ban when the government agreed to make several amendments to the bill.

What did management say

News Corp CEO, Robert Thomson, said of today’s report

Fiscal Year 2021 was the most profitable year since we created the new News Corp in 2013, with revenues rising 4 percent in the full year and surging by 30 percent in the Fourth Quarter. Profitability improved by 26 percent for the year, when we had a record number of digital subscriptions, record revenue and profits at Move and record traffic at realtor.com, record profits at HarperCollins and the largest profit at Dow Jones since its acquisition in 2007.

What’s next for News Corp

In his statement, Robert Thomson said News Corp expects to make “nine figures” annually from its aforementioned deal with Facebook and Google, although the exact sum is confidential.

With COVID cases surging in both the US and Australia, news media still faces an uncertain future.

Over the past 12 months, the News Corp share price has increased an impressive 81.7%. It outperformed the ASX 200 by over 57 percentage points in that time.

News Corp has a market capitalisation of $19.3 billion.

The post The News Corp (ASX:NWS) share price hits 52-week high on FY21 earnings appeared first on The Motley Fool Australia.

More reading

• Why UBS just upgraded these 3 ASX shares to “buy”
• These ASX 200 CEOs have the most wealth tied up in their companies
• Better than Amazon: This ASX share has multiplied 910 times in 20 years

Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to its CEO, Mark Zuckerberg, is a member of The Motley Fool’s board of directors. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and has recommended Alphabet (A shares), Alphabet (C shares), and Facebook. The Motley Fool Australia has recommended Alphabet (A shares), Alphabet (C shares), and Facebook. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

from The Motley Fool Australia https://ift.tt/3xybVJm

The Peak Resources Ltd (ASX: PEK) share price has returned from its trading halt and is sinking on Friday.

In morning trade, the rare earths producer’s shares have fallen 14.5% to 9.4 cents.

Why is the Peak Resources share price sinking?

The catalyst for the weakness in the Peak Resources share price on Friday has been the announcement of the completion of its placement to institutional, sophisticated and professional investors.

According to the release, the company has received commitments to raise approximately $30 million through a two-tranche placement.

Tranche one comprises the placement of 226.8 million shares at 9 cents per share to raise $20.4 million. This represents an 18.2% discount to the Peak Resources share price prior to its trading halt.

Tranche two comprises the placement of 106.4 million shares to raise a further $9.6 million at the same price. This remains subject to shareholder approval

In addition to this, the company will seek to raise a further $4 million via a share purchase plan. This will be undertaken at the placement price of 9 cents per new share.

Why is Peak Resources raising funds?

The proceeds will be used to progress the development of the Ngualla Project and the Teesside Refinery, including offtake and financing arrangements. It also intends to expand its technical and marketing team, and repay the ANRF Royalty Facility in full.

In respect to the latter, the repayment of the ANRF Royalty Facility and accrued interest will cost approximately US$10 million. It will result in the termination of a 2% life-of-mine gross revenue royalty and the release of related security arrangements.

Management notes that the termination of the royalty and related security arrangements enables Peak to fulfil its commitment to transfer the Ngualla Project Special Mining Licence into a newly registered Tanzanian company. That company will be jointly owned by Peak (84%) and the Tanzanian Government (16%).

It feels this enhances shareholders’ exposure to the Ngualla Rare Earth Project and better positions the project to secure attractive long term financing.

Peak Resources’ Managing Director, Bardin Davis, said: “We are delighted to be welcoming new Australian and international institutional investors on to our register. The placement will support Peak as it progresses offtake, funding and development milestones for the Ngualla Project and the Teesside Refinery.”

“The termination of the life-of-mine royalty further de-risks the financing of the Ngualla Project and provides shareholders with increased exposure to earnings from the project and the potential upside in rare earth prices. A combination of lower project outflows and the removal of security arrangements will also better position the project to secure attractive long-term project and export financing support,” he added.

The Peak Resources share price is still up over 30% since the start of the year despite today’s decline.

The post Why the Peak Resources (ASX:PEK) share price is sinking 14% on Friday appeared first on The Motley Fool Australia.

More reading

• Why the Peak Resources (ASX:PEK) share price is soaring 37% today
• Why is the Peak Resources (ASX:PEK) share price halted today?

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. 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.

from The Motley Fool Australia https://ift.tt/37unDtz