The Westgold Resources Ltd (ASX: WGX) share price has come out of a trading halt to record heavy falls today. This follows the gold resource company's update in regards to its recent share placement.
During early afternoon trade, Westgold Resources shares are down a sizeable 14.34% to $2.09 apiece.
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What's dragging Westgold Resources shares lower?
Investors are scrambling to sell Westgold Resources shares as the company prepares to dilute existing shareholder value.
According to its release, Westgold Resources advised it has received strong support to raise $100 million through a share placement.
The offer was presented to both institutional and sophisticated investors at an issue price of $2.10 per share. This equates to roughly 48 million new ordinary shares being added to the company's registry.
The shares will fall under the company's listing rule 7.1. This allows up to 15% of Westgold Resources shares to be issued without shareholder approval.
The funds collected from the placement will be used to accelerate Westgold Resources' Murchison and Bryah growth strategy. This revolves around establishing a systematic pathway towards building a 400,000 ounce per annum gold production rate from FY24.
As such, Westgold Resources is targeting the following:
- Increasing existing Murchison mine production – the Bluebird UG Expansion Project
- Accelerating new Murchison mine production – the Fender UG Development Project
- Advancing strategic development assets across the Murchison and Bryah
- Tuckabianna and Fortnum mill expansions – expand group processing capacity above 4Mtpa
Westgold Resources executive director, Wayne Bramwell commented:
The scale of market support of this placement strongly endorses Westgold's growth plans and speaks to the growing momentum and the evolution of our business.
Westgold will systematically deploy these funds to expand gold production in FY23 and FY24 from Bluebird, Fender and the Tuckabianna trend, underpinning the expansion of our processing hubs. Concurrently, and with a view to FY24 onwards we will rapidly advance the strategic and iconic high- grade Great Fingall and Golden Crown mines.
About the Westgold Resources share price
Over the past 12 months, Westgold Resources shares have moved in circles before accelerating on an upwards trajectory since February.
The company's share price is flat since this time last year, but up by around 2.5% year to date.
Westgold Resources has a market capitalisation of roughly $889.29 million, with almost 425.5 million shares on its books.
