Although many of Australia’s leading gold miners have dropped lower today, the Beadell Resources Ltd (ASX: BDR) share price has made a notably sharp decline.
At the time of writing, the gold miner’s shares have emerged from their trading halt and are down a whopping 9% to 31.5 cents
The reason for today’s decline is news of its plan to raise $51 million through a capital raising.
The company has received commitments to raise $46 million through the placement of 159 million fully paid ordinary shares at a price of 29 cents per share. A 16% discount to the last close price.
A further $5 million will be raised through a Share Purchase Plan.
According to management this capital raising will allow the miner to continue exploration and mill upgrades that it believes are vital to maximising returns for shareholders from its Tucano mine.
Funds will be used to tackle long lead time items associated with the design and construction of plant upgrades including a ball mill.
In addition, it expects the exploration will add quality ounces into the mine plan, both inside the mining lease and also on surrounding tenements.
All in all, management believes the capital raising gives Beadell an “exciting” outlook.
But is it a buy after today’s drop?
If the gold price remains favourable then I think Beadell would be an attractive option for investors looking for exposure to the industry.
This year the company expects to produce between 140,000 to 150,000 ounces of gold at an all-in sustaining cost (AISC) of between US$830 to US$930 per ounce.
If these funds can be used to bring its AISC closer to the low-end of its guidance then Beadell will be positioned for bumper profits. At present the spot gold price is fetching US$1,235 an ounce.
As I’m reasonably bearish on the price of gold I won’t be investing in Beadell. I feel inflation in the United States will rise enough to justify three rate hikes in 2017.
I think this is likely to put pressure on the gold price and the shares of Beadell and peers such as Newcrest Mining Limited (ASX: NCM), Resolute Mining Limited (ASX: RSG), and St Barbara Ltd (ASX: SBM).
If you're bearish on gold like me then these top stocks could be far better investment options in my opinion. Each looks set to have a big 2017, potentially driving their share prices higher.
This company’s dividend is almost the stuff of legends. Its reliable cash flows support a high payout ratio, and the company’s stash of franking credits are the cherry on the top of the dividend cake. Based on the last 12-months of dividends, shares are offering a fully-franked 6.5% yield, which grosses up to a whopping 9.3%, when those franking credits are included.
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Motley Fool contributor James Mickleboro has no position in any stocks mentioned. 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 Bruce Jackson.