The Vulcan Energy Resources Ltd (ASX: VUL) share price has returned from its trading halt and is pushing higher on Thursday.
In early trade, the clean lithium company's shares are up 14% to $8.94.
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Why is the Vulcan share price storming higher?
Investors have been buying Vulcan shares on Thursday after it announced the receipt of firm commitments for its $120 million placement to sophisticated, professional, and institutional investors. These funds are being raised at $6.50 per new share, which is a 17% discount to its last close price.
According to the release, the placement was strongly supported by international and domestic ESG-focused institutions. One of those was cornerstone investor, Hancock Prospecting.
The release refers to Hancock Prospecting as one of the most successful private companies in Australian history and a leader in the resources industry. It is of course led by Executive Chair, Gina Rinehart.
In addition to this, the company notes that a significant investment was provided by the BNP Energy Transition Fund, a European ESG-focused institution.
Why is Vulcan raising funds?
Management advised that proceeds from the placement will be used to support Vulcan through to the final investment decision at its Zero Carbon Lithium Project in Germany.
It intends to use a good portion of the funds for project development, feasibility study costs, and permitting. In addition, funds will be allocated to drill site acquisition and preparation, as well as strategic opportunities to accelerate project development.
Upon settlement, Vulcan will have a cash balance (before placement costs) of ~A$125 million.
Vulcan's Managing Director, Dr. Francis Wedin, commented: "We received overwhelming support for the Placement from both domestic and international ESG-focused institutional investors. This demonstrates clear support for our strategic plan to develop the world's first Zero Carbon Lithium project."
"Proceeds from the Placement provide us with a runway to final investment decision and enables Vulcan to accelerate project development, including targeted delivery of a DFS by Q2 2022."
"The Board and management would like to thank existing shareholders for their continued support and also welcome a number of new, high quality ESG-focused institutions to the share register, including the BNP Energy Transition Fund, in what is the beginning of an exciting journey for Vulcan. We would also like to extend a special welcome to Hancock Prospecting Pty. Ltd. who joins our register as a substantial shareholder, and we look forward to working with them," he concluded.
