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The Blue Star Hélium Ltée (ASX: BNL) The stock price is in free fall today after coming out of a trading stop. It comes after the energy company announced that it had completed a capital increase.
As of early afternoon, Blue Star Helium shares are trading 6.1 cents, down 7.58%.
Investors are heading for the hills, ditching shares of Blue Star Helium as imminent stock dilution looms on the horizon.
According to its press release, Blue Star Helium said it had received firm commitments to raise $ 15 million from institutional and sophisticated investors. The strong support has enabled a number of new national and international clients to be added to the company register.
The well-supported placement will see Blue Star Helium create 267.86 million new common shares at an issue price of 5.6 cents each. This is an 11.7% discount from the 10-day Volume Weighted Average (VWAP) price of 6.34 cents through October 27. Plus, it’s a 15.2% reduction from Wednesday’s closing price of 6.6 cents (before trading stopped).
Under listing rule 7.1, Blue Star Helium will award 141.8 million shares to investors. In addition, the company will also use an extension of the 7.1A listing rule to issue the remaining 126.1 million shares.
The proceeds will be used for exploration and evaluation of the development of helium in its area of Las Animas County, Colorado. This includes a number of strategic objectives such as the expansion of helium exploration and water well drilling activities, other key acreage leasing initiatives and production development studies. .
What did the management say?
Blue Star Helium Managing Director and CEO Trent Spry commented:
Following the granting of our OGDP Form 2A approval for the Enterprise 16 # 1 well, we are delighted to be in the final approval phase to begin drilling our first helium exploration well. We plan to begin drilling this well upon receipt of the approved final drilling license (Form 2), which is typically received within 30 days of submission, which will arrive shortly.
Drilling of the next water well (BBB # 1) is also expected to begin in November. This well is located near the Blue Star Voyager prospect, located approximately six miles north of the Model Dome field. Our water well drilling program not only offers significant benefits for community relations, but also provides a source of additional valuable data regarding helium prospectively on our acreage.
About the Blue Star Helium share price
Despite today’s slump, the Blue Star Helium share price has climbed over 70% in the past 12 months. Year-to-date, the company’s shares recorded a gain of nearly 40%.
Blue Star Helium has a market cap of around $ 76.9 million with just over 1.26 billion shares on hand.