The Bellevue Gold Ltd (ASX: BGL) share price won’t be going anywhere today.
This morning the gold explorer requested a trading halt prior to the market open.
Why is the Bellevue Gold share price in a trading halt?
The Bellevue Gold share price was placed in a trading halt this morning so the company could undertake a material capital raising.
According to the release, Bellevue is aiming to raise $131 million via a placement and share purchase plan. This comprises an underwritten placement to raise $106 million at 85 cents and a share purchase plan to raise up to $25 million at the same price.
The placement price represents a discount of 10.5% to the latest Bellevue Gold share price.
Why is Bellevue Gold raising funds?
The gold explorer is raising funds after completing the Bellevue Gold Project Stage Two feasibility study.
That study reveals that its production estimate has increased by 25% to 200,000 ounces per annum at an all-in sustaining cost (AISC) of $922 per ounce for the first five years.
Management notes that the study puts Bellevue Gold into an exclusive club of global gold projects characterised by a tier-1 location, reserve grade of +5 g/t, and forecast production of +180,000 ounces per annum. It highlights that there are only seven other assets in the world that meet these criteria.
In addition, the company estimates that its annual pre-tax free cashflow will average $270 million per annum in first five years.
Though, it is worth noting that this is based on a gold price of $2,400 per ounce, which is broadly where it trades today. Whether the precious metal will hold up at these levels as rates rise, only time will tell.
What will it cost?
According to the release, the pre-production capital requirement for stage two is estimated at $252 million.
But thanks to its capital raising and an underwritten and credit-approved project loan of $200 million from Macquarie Group Ltd (ASX: MQG), Bellevue Gold is now fully funded to production.
Bellevue Gold’s Managing Director, Steve Parsons, said: “There is one key point of differentiation between this exclusive group of which Bellevue is now a member and other rankings in the industry. That point is superior financial performance.”
“Only seven other assets in the world boast a grade of more than 5 g/t and annual production of +180,000oz in a tier-one location. This study shows Bellevue has Reserves of 1Moz at 6.1 g/t. That underpins annual production of 200,000oz at an AISC of just A$1,014/oz, which in turn generates pre-tax cashflow of A$270M a year.”
Positively, with drilling still underway, Mr Parsons believes there is significant scope to continue growing the production rate and mine life.
“Only 50 per cent of the 3.0Moz Resource sits within the mine plan. And since we completed the current Resource estimate in July, we have announced a number of strong drilling results from outside this inventory. These results demonstrate the potential for further increases in the annual production rate and mine life. With this in mind, we have designed the processing plant so that it can be expanded quickly and in a cost-effective manner,” he added.
The Bellevue Gold share price is expected to return to trade on Monday following the completion of its placement.