The Bellevue Gold Ltd (ASX: BGL) share price is on watch today after the company announced its intention to accelerate its project development with a significant capital raising.
On Thursday, many prominent gold explorers on the ASX saw a rise in share price. For instance, the Hammer Metals Ltd (ASX: HMX) share price rose by 10%, Orecorp Ltd (ASX: ORR) experienced a 7.5% rise and Red 5 Limited (ASX: RED) saw its share price increase by 6.52%.
The Bellevue share price begins trading today after being in a trading halt on Thursday pending this announcement. Bellevue is exploring and developing one of the highest-grade new gold discoveries globally consisting of 2.3 million ounces (Moz) at 10 grams per tonne (g/t). Equally important, is the fact that this discovery is located in the Wiluna Greenstone Belt. Other notable ASX gold miners including the likes of Northern Star Resources Ltd (ASX: NST) and Saracen Mineral Holdings Limited (ASX: SAR), as well as Hammer Metals, also operate within close proximity to this area.
Why is the Bellevue share price on watch?
Bellevue is undertaking raising $100 million via a fully underwritten share placement. Moreover, the placement issue price of $1.00 per share is at a 10.7% discount to the last closing price. The company will also undertake a non-underwritten share purchase plan (SPP) for all eligible shareholders to raise up to $20 million at the same issue price as the placement.
New shares issued under the placement and SPP will rank equally with existing fully paid Bellevue shares on issue. The record date was Wednesday 8 July, meaning any shares purchased after this date are ineligible to participate.
The Bellevue project has a significant, and growing, mineral resource of 2.3 Moz of gold. In addition, there is existing infrastructure close to the high-grade resource. Therefore, the capital costs of development are expected to be low. To illustrate further, the high-grade core is 480,000 oz at 15.5g/t.
The company intends to use the funds for a range of activities. First, to grow the known 2.3 Moz resource further. At present, the resource has grown by ~75,000 oz per month. The discovery cost of this has been A$18/oz since since December 2017.
Second, ongoing exploration for further discoveries as all gold veins remain open in every direction. Third, to fund underground mine development and non process infrastructure.
Management commentary
Bellevue Managing Director, Steve Parsons said the “…proceeds from the raising will help ensure we can unlock the full value of what is clearly an exceptional asset with extremely high grades and immense scope for further inventory growth”. He went on to say “By implementing our dual exploration and development strategy, we will seek to maximise our ability to create value for shareholders through both resource growth and project development”.
Bellevue share price
On Wednesday, the company’s share price was not far off all time highs and closed the day at $1.12, valuing the company at $766.7 million.
As a growing gold explorer, Bellevue has no current revenues and pays no dividends. At the time of writing, the gold price is trading at US$1808, just shy of the US$1884.20 all-time high reached in September 2011.
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Motley Fool contributor Daryl Mather owns shares of Bellevue Gold Ltd. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.
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