S&P/ASX 200 Index (ASX: XJO) gold stock Gold Road Resources Ltd (ASX: GOR) is taking a tumble today.
Shares in the Aussie gold miner closed Friday trading for $1.82 a share. In late morning trade on Monday, shares are swapping hands for $1.70 apiece, down 6.9%.
For some context, the ASX 200 is down 0.5%. And in a better comparison of apples to apples, the S&P/ASX All Ordinaries Gold Index (ASX: XGD) – which also contains some smaller miners outside of ASX 200 gold stocks – is down 1.9%.
Here's why the Gold Road share price looks to be underperforming today.
ASX 200 gold stock may be poised for fund raising
In an announcement released this morning, Gold Road Resources responded to media speculation in The Australian regarding the ASX 200 gold stock's potential acquisition of an interest in the $1 billion plus Greenstone Gold Mines, located in Canada.
Greenstone Gold Mines is a 60/40 partnership between Equinox Gold and Orion Mine Finance.
According to Equinox, the assets have excellent access to infrastructure and "are made up of several claim groups having a cumulative strike length of more than 105 kilometres along the district's most prospective geological structures".
Today the ASX 200 gold stock confirmed its participation in a sale process conducted by Orion Resource Partners for Greenstone Gold Mines.
According to Gold Road:
This participation remains on going and Gold Road has not entered into any definitive acquisition agreements with respect to Greenstone Gold Mines. Gold Road continues to evaluate strategic opportunities and will only pursue acquisitions if it is in the best interests of its shareholders.
With gold prices regularly having reset new all-time highs in recent months, this could prove to be an opportune time for Gold Road Resources to expand its footprint.
Gold touched another new record high of US$2,395 per ounce on Friday. Despite rising geopolitical tensions in the wake of Iran's attack on Israel, the yellow metal has since retraced a touch and is currently fetching US$2,356 per ounce.
Still, that's up more than 19% since 14 February, when bullion was trading for US$1,992 per ounce.
So, why is the Gold Road Resources share price under heavy selling pressure today?
Most likely it relates to this revealing line, reported in The Australian, "It is believed that should Australian-listed Gold Road buy Greenstone, it would be accompanied by a monster capital raising."
And as you're likely aware capital raisings, especially of the 'monster' variety, tend to dilute shareholder value over the short to medium term.
Gold Road share price snapshot
With today's intraday moves factored in, the Gold Road share price is down 5% over 12 months.
Shares in the ASX 200 gold stock remain up 22% since the recent lows on 21 February.
