Institutional investors have loaded up on new shares in graphite miner and technology company Syrah Resources, which has raised $74 million via an institutional placement and entitlement offer this week.
The money is the first part of a $110 million capital raising the Melbourne-headquartered company announced on Tuesday.
Syrah, which is hoping to capitalise on the growth markets for lithium-ion batteries used in electric vehicles and energy storage, will use most of the funds - about $US50 million ($62.8 million ) - to continue developing a graphite mine in Mozambique in Africa. About $US25 million of the funds will be spent developing a battery anode plant in the US.
In a statement to the ASX, Syrah said: "The book for the placement and small amount of shortfall from the institutional entitlement offer was heavily oversubscribed, having received very strong demand from existing shareholders as well as non-shareholders. Allocations were made exclusively to existing Syrah shareholders."
Syrah, which has a market capitalisation of about $926 million, has a 25-year lease on the Balama graphite project in Mozambique, with an option for a further 25 years. It says the Balama project will be "the leading global producer of high purity graphite".
However, this week's equity raising surprised some investors and is the third by Syrah in little more than two years.
In an interview with Fairfax Media, the company's managing director, Shaun Verner, said Syrah had been seeking a debt facility, but "because of the cost of debt we chose to do an equity raise instead".
Mr Verner said the company was "really pleased" with how the first part of the capital raising had gone.
"Obviously, we've had very good support from our current institutional shareholders. So the whole placement and the entitlement offer was allocated to existing shareholders. So it's been a fantastic outcome," he said.
"We expect to see strong support for that (the retail entitlement offer) as well. And there's a large number of retail shareholders who've held a positive view on the company for a long time, and we see a lot of support from them around the thematic of electric vehicles."
In its equity capital raising presentation Syrah said about 33 million new shares would be issued at $3.38 a share.
After being in a two-day trading halt while the first element of the capital raising was undertaken, Syrah shares resumed trading on Thursday and closed 29 cents down at $3.51.
The reporter owns shares in Syrah Resources.
