The company also has the option to raise up to $1 million to facilitate oversubscriptions.
Significantly, the placement's price represents a 40% premium to the 15-day volume weighted average price (VWAP), suggesting the prospect of raising $5 million appears achievable.
Participants in the share placement will receive an attaching 1:4 unlisted option exercisable at $0.25 and expiring 31 May 2019.
Funding provides financial support for resource expansion activity
The capital raised will be used to accelerate the company’s definitive feasibility study (DFS) drilling program at Wolfsberg.
This is expected to provide the company with a better understanding of the size and value of the deposit in zone 2 which has demonstrated the potential to host a resource extension.
Management expects to finalise the pre-feasibility study (PFS) by the first quarter of 2018 and have the DFS completed by the third quarter.
Tony Sage, chairman said, "This is a very exciting period for the company with strong support coming from UK and European investors who have bought in excess of 120 million of the company's shares in the last two months."
Investors on the lookout for quality projects in safe jurisdictions
This trend echoes commentary from a number of ASX listed companies that attended the recent Mines and Money conference in London.
Northern hemisphere investors have a healthy appetite at the moment for quality projects in safe jurisdictions with ready access to end markets, a label that certainly applies to European Lithium.
The company’s shares traded as high as $0.33 before closing at $0.32, up 10.3% on the previous day.
Board appointment provides financial expertise and regional experience
The October appointment of Stefan Muller as an independent non-executive director has been strategically important for European Lithium.
He brings 25 years of experience in financial markets and investment banking to the group and is the chief executive officer and founder of DGWA, a German-based investment consulting firm.
DGWA along with Somers and Partners and Wimmer Financial acted as corporate financial advisors to the placement.
News flow surrounding the release of the PFS and DFS are potential share price catalysts in 2018.