Zanaga Iron Ore Company Ltd's shares dropped 13% on what looked like a fairly benign funding package designed to limit dilution.
Shard Merchant Capital said it will try to sell 36 million Zanaga shares in three tranches, returning 95% of the proceeds. At today's prices, the mine developer would receive £3.7 million. In turn, the additional stock would increase Zanaga's equity base by just 5.9%.
Chairman Clifford Elphick said: "Following entry into the equity subscription agreement, ZIOC is pleased that a financing structure has been put in place which will give the company access to funding through a relatively low-cost structure which minimises dilution to shareholders.
"This transaction enables ZIOC to secure capital in the future as the project progresses and further milestones are achieved."
The stock dropped 1.62p to 10.83p.