Shares of Ncondezi Energy Ltd (LON: NCCL) plunged 25.6% after announcing that it had raised £600,000 through the issuance of 40 million new shares at a discounted price of 1.5p for each new ordinary share.
The markets reacted negatively to the news because the new shares were issued at a significant discount to the company’s closing share price on Wednesday.
Investors ignored the fact that Scott Fletcher, a Non-Executive Director, had subscribed to 3.33 million shares worth a total of £50,000, demonstrating confidence in the company’s prospects.
Ncondenzi also said that for every two shares subscribed for during the placement, the holders have the warrant to acquire an additional share upon the lapsing of the vesting period in 18 months.
Hanno Pengilly, Ncondezi’s CEO, said:
“We are pleased to have successfully completed the fundraise, which ensures the Company is adequately capitalised to complete the next phase of de-risking milestones for the Project. The Board considered a range of funding options and proceeded with the fundraise as the best solution on a cost and dilution basis for all shareholders versus other alternative financing arrangements that were proposed.”
Ncondenzi’s share price has been falling since peaking in January 2011 due to its focus on coal power as the world races towards renewable energy sources and zero-emissions energy sources.
“Despite the increasing challenges around coal investment globally, a strong business case remains for its use as a key supplier of reliable, low-cost baseload power. As a result, coal power remains one of the main generation sources globally, and Ncondezi believes it can play an important role as part of a balanced and sustainable energy transition for the southern African region whilst adhering to the strictest international environmental standards.”
Ncondenzi share price.
Ncondenzi shares plunged 25.58% to trade at 1.60p, falling from Wednesday’s closing price of 2.15p.
Ncondezi Energy shares are traded on the London stock exchange's AIM market (the alternative investment market), which is the submarket specifically for smaller companies. AIM stocks are attractive to investors as they have tax advantages and smaller companies have the potential to benefit from rapid growth. But are NCCL shares the best buy? Our stock market analysts regularly review the market and share their picks for high growth companies
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