It's been a positive day overall for ASX shares and the All Ordinaries Index (ASX: XAO) so far this Tuesday. At the time of writing, the All Ords has put on a happy 1.05%, lifting the Index back over 7,200 points. But that joy is not extending to one All Ordinaries stock. So let's check out the Kingsgate Consolidated Limited (ASX: KCN) share price.
Kingsgate shares are having a shocker today. The All Ords gold miner closed at $2.01 a share yesterday but is now trading at $1.495 a share, a nasty 25.62% fall.
So what on earth is going on with this gold miner that has prompted investors to wipe a quarter of the company's value off the markets today?
Image source: Getty Images
Kingsgate shares tank 25%
Well, Kingsgate shares have actually just returned from a trading halt. Yes, yesterday morning, just before market open, the company announced that its shares would be frozen. The purpose of this suspension was to allow Kingsgate to conduct a capital-raising program.
It was only on Friday last week that the gold miner told investors it had produced its first gold from its Chatree mine in Thailand. It's the first pouring in six years.
Then on Monday, we got news of the trading halt. Kingsgate announced that it intended to conduct an institutional placement of shares. In fact, 30.7 million new shares are to be issued (equivalent to 13.9% of the shares on issue prior to the announcement).
The shares would be issued at a price to be determined by a bookbuild, somewhere between $1.50 and $1.60 per share.
The company also announced that a share purchase plan would also be available for retail investors following the placement. It will be offered at the same price that institutional investors were offered.
Why is this All Ordianries stock raising capital?
According to Kingsgate, the funds will be used to "successfully re-start operations at Chatree and strengthen Kingsgate's balance sheet as alternative funding sources are secured".
Well, today, we got the news of how it all went. The company reported that the placement was successful and raised $42 million for Kingsgate. The new shares have been issued at a price of $1.50 each. Retail investors can now apply for up to $30,000 in new shares at that price as well.
Kingsgate chair Ross Smythe-Kirk said the following on this news:
The strong support shown from both new Australian and international investors and existing shareholders in this Placement is a firm endorsement for the Company and its strategy. We are thrilled to be recommencing operations at Chatree and returning to production.
We thank shareholders for their long-standing support and look forward to seeing Chatree once again become a meaningful ASX-listed gold producing project.
Kingsgate was evidently only able to raise its new capital at the lower end of its pricing target. As such, we probably have this news to thank for Kingsgate's less-than-triumphant return to trading today.
This isn't a large ASX share, so with the offer of the share purchase plan on the table, there probably aren't too many investors willing to pay over $1.50 a share for Kingsgate right now.
This All Ordinaries stock is now down by 14.3% in 2023 to date:
