The S&P/ASX All Ordinaries Index (ASX: XAO) persevered on Wednesday, despite roughly half its members ending in the red. However, the worst-performing ASX All Ords share finished 22% lower.
While painful, the wretched performance was not an unfamiliar script for Pantoro shareholders.
Over the past year, the gold miner has shed 71%. Pantoro has been under the pump, contending with large cash outflows while consolidating and ramping up its Western Australia operations.
But why did Pantoro shares receive a whipping today?
This ASX All Ords share is getting diluted
Pantoro elected to enter a trading halt on Monday pending an announcement regarding a capital raising. Fast forward to today, and we now know the full details.
According to the announcement, the gold miner has successfully raised A$30 million via an institutional placement. In total, 500 million new shares will be issued to participants in the placement at a price of 6 cents per share.
Notably, the offer price represents a 20.5% discount to the five-day volume weighted average price of 7.6 cents per share on 4 August 2023.
In tapping the market for additional funds, Pantoro will dilute its existing shareholders. Based on the prior share count, this ASX All Ords share will see its shares on issue expand by approximately 11% from 4.7 billion to 5.2 billion.
On another note, Pantoro's equity-raising presentation cited two reasons why its cash buffer had eroded:
- Cash flow losses incurred amid a delay in reaching higher grade material; and
- Higher merger transaction costs and creditor balances than expected
This might raise some eyebrows among shareholders. For one, it could suggest inadequate due diligence was carried out on the mergers. It could leave investors wondering if more skeletons in the closet are yet to be found.
Pantoro shared its Diggers and Dealers presentation with investors alongside the cap raise today. At 20 pages long, there could be any number of takeaways that perhaps weren't to the liking of its investors.
One number that stood out was the company's production guidance of 100,000 ounces for FY24 at an all-in-sustaining cost (AISC) of A$1,900 per ounce. That's not particularly low when compared to other miners.
For example, Newcrest Mining Ltd (ASX: NCM) reported an AISC of A$1,651 per ounce at the end of December 22. Meanwhile, Northern Star Resources Ltd (ASX: NST) delivered an AISC of A$1,813 per ounce for this year's March-ending quarter.
This, in conjunction with the earlier mentioned delays in hitting higher grades, could also have weighed on this ASX All Ords gold share today.