The Regis Resources Limited (ASX: RRL) share price has returned from its trading halt and is crashing notably lower.
In early trade, the gold miner's shares are down 17% to a 52-week low of $2.61.
Why was the Regis share price in a trading halt?
The Regis Resources share price was placed in a trading halt this week while it launched an equity raising.
The company launched the equity raising after signing a conditional binding agreement with IGO Ltd (ASX: IGO) to acquire its 30% interest in the Tropicana Gold Project for A$903 million.
This morning Regis Resources announced the successful completion of its institutional placement and the institutional component of its fully underwritten entitlement offer.
According to the release, the placement and the institutional component of the entitlement offer raised a total of approximately A$494 million at $2.70 per new share. This represents a 14.8% discount to its last close price.
Regis Resources revealed that it received strong demand for its placement and the entitlement offer was well supported. The latter had a take-up rate from eligible institutional shareholders of approximately 86%.
Regis will now seek to raise approximately A$156 million from the fully underwritten retail component of the entitlement offer. This will be undertaken at the same price, which is actually higher than the current Regis share price.
"Transformational transaction"
Regis' Managing Director and CEO, Jim Beyer, commented: "As noted in Regis' ASX announcement on 13 April 2021, the proposed acquisition of a 30% in the Tropicana Gold Project is a transformational transaction for Regis, and we are very pleased with the strong demand and the support from new institutional investors and existing institutional shareholders which we see as reflecting the strong support for the transaction."
The company notes that Tropicana is a low cost, high margin, top five producing Australian open-pit and underground gold mine located in the Albany-Fraser Orogeny in Western Australia.
It is one of the largest gold mines in Australia with gold production of 463koz in FY 2020 and guidance of 380koz – 430koz in FY 2021. It diversifies Regis' existing production base and comes with a world class joint venture partner in AngloGold Ashanti.
However, judging by the performance of the Regis share price today, the market doesn't appear convinced by the move.
