Why is this ASX gold share exploding 100% on Monday?

This gold share is rocketing on Monday…

A man clenches his fists in excitement as gold coins fall from the sky.

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The Besra Gold Inc (ASX: BEZ) share price is having a sensational start to the week.

In morning trade, the Malaysia-based gold explorer's shares were up as much as 103% to 6.5 cents.

At the time of writing, the Besra Gold share price has eased back a touch but remains up 72% to 5.5 cents.

Why is the Besra Gold share price rocketing higher?

Investors have been scrambling to buy shares today after the company announced that it was raising funds.

While raising funds more often than not sends a share price lower, this wasn't the case with Besra Gold's capital raising. That's because it is raising funds at a material premium to its last close price.

According to the release, Besra Gold has signed a subscription agreement with Quantum Metal Recovery for the issue of ~11.1 million new shares at 9 cents per share to raise $1 million. This is almost three times greater than its last close price of 3.2 cents.

Management advised that the proceeds from the placement will be used to fund activities at the Bau Gold Project and for general working capital.

But it may not stop there. The company is also in advanced discussions with Quantum concerning broader funding support of Besra's activities. Though, it warned that there is no assurance that such discussions will result in binding agreements.

Besra Gold's CEO, Dr Ray Shaw, commented:

Quantum has with this Placement shown a clear commitment to support our exploration and development strategies at Bau and we welcome their increased investment in Besra. The Bau Gold Project has a Resource estimate of 72.6Mt @ 1.4 g/t for 3.3Moz1 (JORC 2012) of gold, involving a number of discrete deposits as well as an Exploration Target ranging between 4.9Moz and 9.32Moz2 (on a 100% basis). I am very excited with the enthusiasm Quantum has shown for Bau and I look forward to further developing our relationship.

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. 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 Scott Phillips.

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