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Cadence Minerals (KDNC) Shares Plunged 23.3% on Discounted Share Placement

Simon Mugo trader
Updated 3 Feb 2022

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Key points:

  • Cadence M minerals shares plunged 23.3% after discounted share placement.
  • Investors were not happy with the placement despite it being oversubscribed.
  • The company will invest the proceeds in its Amapa Iron Ore project in Brazil.

The Cadence Minerals PLC (LON: KDNC) share price crashed 23.3% after announcing that it had raised over £4.1 million via an oversubscribed share placement, with each of the new shares being priced at 20.5p each.

The company thanked shareholders for their overwhelming support during the fundraising. The placing was oversubscribed despite the new shares being priced at a significant discount to yesterday’s closing price.

Cadence intends to use the funds raised to progress the Amapa iron-ore project in Brazil, where it intends to raise its stake to 27% from the current 20%.

Also Read: The Best Uranium and Uranium Mining Stocks to Buy.

The mining company’s shares had rallied higher yesterday after its joint venture partner Hastings Technology Metals received approvals for a significant portion of the debt needed to construct the Yangibana Rare Earths Project in Australia.

The Northern Australia Infrastructure Facility (NAIF) had approved debt worth A$140 million applied for by Hastings Metals to construct the Yangibana project, whose total project costs are approximately A$300-400 million.

The funding is structured as a 12.5-year tenure loan facility and will go a long way in ensuring that the project kicks off and is completed on time.

Cadence Minerals discounted share placement rubbed investors the wrong way since the new shares represent about 11.9% of the company’s issued share capital, which dilutes existing shareholders.

The new shares are expected to start trading on the London Stock Exchange’s AIM market, and the AQSE Growth Market on 10 February 2022 at 8.00 am.

Investors were not happy with the discounted capital raise, evidenced by the massive decline in Cadence Minerals share price. However, the company’s fundamentals appear pretty promising given the progress made at its Amapa Iron Ore project.

The Yangibana Rare Earths project in Australia is also another promising project that could generate significant revenues for the company once operational. As a result, cadence Minerals shares look pretty attractive at current prices.

*This is not investment advice. Always do your due diligence before making investment decisions.

Cadence Minerals share price.

IG chart of Cadence Minerals share price 03-02-2022
Source: IG

Cadence Minerals share price crashed 23.33% to trade at 20.70p, falling from Wednesday’s closing price of 27.00p.

Simon has over six years of professional trading experience across FX, commodities and equities. He has a strong passion for financial markets and is particularly focused on price action trading