The Red 5 Limited (ASX: RED) share price has been one of the worst performers on the Australian share market on Friday.
In afternoon trade the gold miner's shares are down 16% to 16 cents.
This latest decline means the Red 5 share price is down a disappointing 38% since the start of the year.
Why is the Red 5 share price crashing lower today?
Investors have been selling Red 5's shares on Friday after it announced the completion of a $39 million institutional placement and entitlement offer.
Red 5 raised the funds via a 4-for-21 fully underwritten accelerated non renounceable entitlement offer that saw the company issue approximately 245 million shares at a 16% discount of 16 cents per new share.
Following its completion, the company will now push ahead with the retail component of the equity raising. This is seeking to raise a further $21 million at the same price.
Petra Capital and Canaccord Genuity are acting as Joint Lead Managers, Joint Bookrunners, and Joint Underwriters of the Entitlement Offer.
Why is Red 5 raising funds?
According to the release, proceeds from the entitlement offer will be applied to King of the Hills (KOTH) development, drilling and development programs at the Darlot Gold Mine, and general working capital.
Red 5's Managing Director, Mark Williams, commented: "The launch of the fully underwritten capital raising this week marked a critical step in Red 5's development strategy, providing the balance of funding for the KOTH project."
"We are delighted with the support received from our existing institutional investors. The Entitlement Offer is also available for our retail shareholders to ensure that all Red 5 shareholders are given the opportunity to participate in the funding of the KOTH Project."
"The strong outcome reflects the market's confidence in our growth pathway, which will see Red 5 evolve into a multi-asset, mid-tier gold producer in the near future," he concluded.
