Baobab Resources, the Mozambique-focused iron ore explorer, fell hard on Wednesday after it created millions of new shares.
The firm's stock fell 10% after it drew down £1.02m of its £17m equity line facility with Dutchess Opportunity Cayman Fund.
Under terms of the facility, the company has now allotted 7.14m new shares to Dutchess at a price of 15.25p each.
Subscribe to MoneyWeek
Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE
Sign up to Money Morning
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Baobab said the funds would be used to accelerate certain aspects of its Definitive Feasibility Study of the company's flagship pig iron project at Tete.
Following this drawdown the outstanding balance of the facility will be £13,825,800, it added.
Chairman, Jeremy Dowler, said the money would allow Baobab to accelerate time critical components of the impending study and in particular seasonal baseline studies and metallurgical drilling.
"The additional capital will also enable the company to move rapidly on any corporate opportunities that may arise," he said.
"The funding was completed at a pre-commission value of 15.25p which is substantially higher than Baobab's previous funding at 8p per share and leaves the company with a significant cash balance at the start of 2013".
-
Adidas, Nike or Jordans - could collectable trainers make you rich?The right pair of trainers can fetch six figures. Here's how you can start collecting vintage Adidas, Nike or Jordans now
-
Early bird ISA investors flock to global funds, India and the USThere’s been an increase in investors maxing out their ISA at the start of the new tax year. But where are they putting their cash and why does it make sense to be an early bird investor?
