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Commodities & Metals

Avalon Joins Rare Earth Capital Raising Efforts (AVL, REMX)

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By Jon C. Ogg Published

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Avalon Rare Metals Inc. (AMEX: AVL) is getting hit pretty hard this morning after shares were hit hard last night.  The emerging rare earth materials players filed to sell some 7 million shares of common stock in a secondary offering to raise close to $45 million depending upon the exact share price.

The good news is that shares are being sold by the company rather than merely sold off by insiders looking to cash out.  Avalon is also using the proceeds for a specific and good purpose.  The “use of proceeds” is to complete a bankable feasibility study on the Thor Lake Project and for working capital and general corporate purposes.

Shares rose 6.9% on Tuesday but the stock is back down about 6.2% this morning to $6.39 in the pre-market trading hours. Avalon’s 52-week trading range is $2.30 to $10.11.

Before the effects of this offering and before the effects of the pre-market drop, the listed market capitalization is $638 million.

Market Vectors Rare Earth/Strategic Metals ETF (NYSE: REMX) is full of these rare earth plays, but Avalon is only represented with a 3.5% weighting as of the last ETF reporting date.

JON C. OGG

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About the Author Jon C. Ogg →

Jon Ogg has been a financial news analyst since 1997. Mr. Ogg set up one of the first audio squawk box services for traders called TTN, which he sold in 2003. He has previously worked as a licensed broker to some of the top U.S. and E.U. financial institutions, managed capital, and has raised private capital at the seed and venture stage. He has lived in Copenhagen, Denmark, as well as New York and Chicago, and he now lives in Houston, Texas. Jon received a Bachelor of Business Administration in finance at University of Houston in 1992. www.247wallst.com.

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