Lotus Resources (ASX: LOT) cap raise
Well, I've held onto Lotus Resources through the troubles and turmoil, much to my chagrin. Is this new - or should I say, next - entitlement offer at $0.22 cents just throwing good money after bad?
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Answer
David,
Lotus Resources (LOT) has become a small $120mn African-focused uranium developer advancing the Kayelekera Uranium Project in Malawi toward production, while also owning the Letlhakane Uranium Project in Botswana.
For background, LOT has announced a $138.1 million strategic funding package to support the ramp-up of its Kayelekera uranium mine in Malawi. The package includes a fully underwritten $60.1 million accelerated non-renounceable entitlement offer, $35 million of senior unsecured convertible notes from CVI Investments (managed by Heights Capital Management), and additional funding components that complete the package.
- The Financial Review described the transaction as an “emergency fundraising”, which sounds about right, with the issue at a whopping 66% discount to the last traded price.
A huge win for the short sellers: in early July nearly 23% of total shares were sold short, making LOT the most shorted stock on the ASX. With little downside from current levels the shorts might step up and cover into the likely raise weakness but we see further liquidity issues ahead for LOT over the coming year as it continues to burn cash at an alarming rate.
- MM has no interest in LOT, even below 20c.
