Bellevue Gold investors were caught off guard on Thursday when the gold miner came out with a capital raising worth up to $175m and a production forecast lower than the market expected after repeated denials from the managing director that a cash call could be on the agenda.
Shareholders have been wondering for about a year as to whether Bellevue Gold will raise equity to fund its Bellevue Gold project that entered production in the fourth quarter of last year on time and on budget.
At Kalgoorlie’s Diggers and Dealers conference in August, managing director Darren Stralow said that the company had no plans to raise equity.
He also insisted at the Macquarie Australia Conference in Sydney during May that an equity raise would not be on the cards.
But Thursday, the company announced it would raise $150m by way of a placement and up to $25m by way of a share purchase plan.
It has also came out with production guidance that was about 10 per cent lower than what some in the market had expected based on a study for the project shown to the market about two to three years ago with some estimates and at a lower grade.
Shares are being issued at $1.55 each, a 15.3 per cent discount to its last traded price on July 24 of $1.83 with its forecast downgraded by 5 to 10 per cent.
Working on the deal are Macquarie Capital, UBS and Canaccord Genuity.
One explanation for the surprise move could be that lender Macquarie insisted that it top up its position in exchange for a waiver of its covenants within fiscal 2025 to allow the immediate start of growth capital spending prior to formal approval by Macquarie Bank.
At June, it had $219m of bank debt and $143m of net debt.
Macquarie Bank recently tipped gold explorer Calidus Resources into administration so is perhaps taking a more cautious approach to lending in the resources space.
Some in the market believed it was a surprise that Bellevue Gold pulled the trigger on a raise a week before the company’s three-year plan and it coincides with its site tour next week.
Bellevue Gold’s share price moved over $2 earlier in the month but has since fallen but has been tracking the record gold price highs this year.
The $1.8bn miner last raised about $70m in December 2022 and last year, some thought that the company had one more raise on its agenda as it prepared to ramp up production.
The Bellevue Gold project is located 40km north of Leinster in the Northern Goldfields region of Western Australia.
The company has promoted itself as being the highest grade gold miner play on the ASX and some last year thought the share price is trading on promising expectations which needed to be delivered on.
Bellevue offered production guidance for the 2025 financial year of 165,000 to 180,000 ounces project at all in sustaining costs (AISC) of $1750 to $1850 an ounce, with the production profile weighted towards the fourth quarter of the 2025 financial year.
This was lower than anticipated by the market.
The five-year growth plan sees progressive mine and processing ramp up over the next three financial years to a steady state of 250,000 ounces per annum production rate in fiscal 2028 and fiscal 2029, reducing to a project AISC of $1500 to $1600 an ounce.
It achieved its guidance of 80,000 ounces of gold production in the second half of 2024, delivering $41m of operational free cash flows during the June quarter.
It will be one of seven gold projects globally producing 250,000 ounces annually.
“We are now ideally placed to position the company for a strong future marked by a lower risk profile and a growing production outlook,” Mr Stralow said.
BGL Price at posting:
$1.42 Sentiment: None Disclosure: Held
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