Ferro-Alloy Issues Shares to Supplier
Why we think this is neutral
The equity raise is relatively small and at a modest 5% discount, suggesting reasonable investor appetite for the company's shares. However, the need to issue shares to settle a supplier balance indicates potential working capital challenges, and the lack of updates on the core vanadium project leaves uncertainty about the company's growth outlook.
Key Points
- Ferro-Alloy issued 8,657,115 new shares at 7.84p per share (5% discount to previous close) to settle £678,501.37 (US$872,552.76) supplier balance
- Raise is relatively small compared to £41.22M market capitalization, limiting dilution impact
- Purpose is to settle supplier balance rather than fund growth or repay debt
- Broker Shore Capital maintains "House Stock" recommendation, indicating continued support
- Lack of updates on core vanadium project leaves uncertainty about growth outlook
Summary
Ferro-Alloy Resources Limited has issued 8,657,115 new ordinary shares at a 5% discount to the previous closing price to settle a £678,501.37 (US$872,552.76) balance due to a supplier. The relatively small size of the raise compared to the company's £41.22M market capitalization indicates the dilution impact on existing shareholders is not significant. Shore Capital, the company's broker, has maintained a "House Stock" recommendation, suggesting continued support. However, the need to issue shares to settle a supplier balance could indicate potential working capital challenges, and the lack of updates on the company's core vanadium project leaves uncertainty about its growth outlook.