Why is the Black Cat (ASX:BC8) share price falling 5% today?

The Black Cat Syndicate Ltd (ASX: BC8) share price is falling today after the company announced a successful share placement. Here's the tea.

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The Black Cat Syndicate Ltd (ASX: BC8) share price is slumping today after the company announced a successful share placement. Overall, it raised more than $20 million. At the time of writing, the Black Cat share price is trading 4.52% lower at 74 cents.

Black Cat is a goldfield project miner engaged in the exploration and development of the Bulong Gold Field project located to the east of Kalgoorlie.

Capital raising initiative

Black Cat's capital-raising scheme wasn't open to the public. Instead, the company raised its $20 million target via a placement to sophisticated and professional investors. 

It raised the $20 million (before costs), at a price of 67 cents per share. Black Cat stated the funds raised from the placement will be applied to extension and exploration drilling, mill equipment purchases, feasibility studies and other working capital projects.

The entire process was undertaken without the need for shareholder approval, including the issue of over two million additional shares.

The company is focusing on a "low-capex, rapid start-up" strategy for its Kalgoorlie East Gold Project. In March 2021, Black Cat acquired a 1.5 million-tonne-per-annum milling facility, including two ball mills and ~60% of the equipment required to run the facility, for $1.24 million.

Management comments

Black Cat managing director Gareth Solly welcomed the investment, saying:

We are delighted with the support for the Placement and welcome a number of highly credentialed Australian and offshore institutional investors to the register. On behalf of the Board I would also like to thank our existing shareholders for their ongoing support.

The Placement will allow the Company to progress its start-up strategy, targeting first production in the second half of 2022. In the June 2021 quarter, we will commence the removal and relocation of our 1.5Mtpa facility. In May 2021, we are anticipating announcing Resource upgrades from the Fingals Mining Centre. Furthermore, we look forward to updating investors with results from our extensive drilling programs and ongoing Resource extensions and upgrades.

Black Cat share price snapshot

Including today's falls, the Black Cat share price is now down by more than 6% over the past week. The company's shares are, however, up by almost 3% year to date and around 68% over the past year. 

Motley Fool contributor Lucas Radbourne-Pugh has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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