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".
-
ScottishPower launches half-price electricity at weekendsNews ScottishPower is offering 50% off electricity at weekends, which could slash hundreds off your bill. We look at who can get it and how to apply
-
Trump calls “tariff” the “most beautiful word in the dictionary”, but investors may disagreeDonald Trump has promised to slap Mexico, Canada and China with new tariffs on day one of his presidency. What does it mean for the economy and investors?
