The Evolution Mining Ltd (ASX: EVN) share price has returned from its trading halt and dropped deep into the red.
In morning trade, the gold miner's shares are down 15% to $3.52.
Why is the Evolution share price tumbling?
Evolution's shares are under pressure today after the company completed a major capital raising.
According to the release, the miner has completed a $525 million fully underwritten institutional placement of approximately 138.2 million new shares at a price of $3.80 per new share.
This represents a discount of 8.2% to where the Evolution Mining share price was trading before its trading halt.
The company will now push ahead with a share purchase plan that aims to raise up to $60 million from retail shareholders. These funds will be raised at the lower of the institutional placement offer price and a 2.5% discount to the 5-day volume weighted average price of Evolution shares traded up to its closing date.
Why is it raising funds?
As we covered here yesterday, the proceeds from the capital raising will be used to partly fund the acquisition of an 80% interest in the Northparkes Copper-Gold Mine from CMOC Group for total cash consideration of up to US$475 million.
This comprises an upfront cash consideration of US$400 million and contingent consideration of up to US$75 million.
Evolution's executive chairman, Jake Klein, commented:
We are pleased to see our shareholders and new investors are in support of the Placement and our acquisition of Northparkes. Northparkes is a reliable, well-established, long-life copper and gold operation that fits well with our strategy of targeting a highly concentrated portfolio of up to eight quality assets. As a cash flow generating asset from Day-1, the acquisition of Northparkes is aligned to our deleveraging strategy and positions Evolution to continue its track record of delivering strong shareholder returns.
Why are its shares falling more than its capital raising discount?
It is worth noting that the Evolution Mining share price missed out on a gold selloff on Tuesday, which has also continued today, so has some catching up to do today.
In addition, it's possible that some investors may have doubts about the company making such a major acquisition while the gold price is near a record high.