Eurasia Mining (LSE:EUA) has successfully raised $15m through a private placement to help fund its ongoing Rosgeo JV mining project. Investors had a somewhat muted response to the announcement. And due to new shares being issued, the subsequent dilution effect triggered a slight decline in the EUA share price. However, over the last 12 months, the stock has climbed just under 40%.
On Monday, the early-stage mining business announced that 41.5 million new shares had been sold to institutional investors at 26p per share. In addition, Eurasia mining also sold new equity warrants that grant these institutions the right to buy another 41.5 million shares at a price of 26p within the next three years.
The raised capital has enabled the company to boost its cash position from $20m to $35m. The plan is to deploy the newly acquired funds to further finance its joint venture with Rosgeo in developing a collection of open-pit mines. These mines contain various battery-essential metals, including palladium, and platinum, among others.
What’s next for the EUA share price?
Management has decided to limit further private equity placements to mitigate the effects of shareholder dilution. In total, an additional 83.1 million shares have been created. By comparison to the 2.9 billion already in circulation, this places the dilution effect to be around 2.9%. However, as the warrants currently remain unexercised, the full extent of this dilution effect has yet to take place.
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Zaven Boyrazian has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.