Sarecen Mineral Holdings Ltd (ASX: SAR) is in a trading halt after announcing a $796 million equity raising.
What did Saracen announce this morning?
A weekend article in the Australian Financial Review (AFR) speculated on the potential raising on Sunday evening.
Those suspicions were confirmed this morning when Saracen announced a $796 million equity raising. Unless ASX decides otherwise, Saracen shares will remain in a trading halt until Wednesday 20 November 2019.
The raising will involved both an underwritten institutional placement and an underwritten 1 for 5.75 pro-rata accelerated entitlement offer. The placement will raise $369 million with the remaining $427 million coming from the entitlement offer.
What is Saracen using the funds for?
The funds are being put towards a 50% stake in the Super Pit gold mine in Kalgoorlie. Newmont Goldcorp will be Saracen's joint venture (JV) partner in the project.
Saracen has entered a binding sale agreement with Barrick Gold Corporation to acquire its 50% interest in the Kalgoorlie Consolidated Gold Mines (KCGM) JV.
Saracen will purchase 100% of the shares in Barrick for a price of US$750 million (A$1.1 billion).
The company said it is all part of its objective to "future proof the business" with a significant new deposit.
The purchase is a "highly accretive acquisition for Saracen shareholders", which could see Saracen shares move when the trading halt lifts on Wednesday.
How have Saracen shares performed in 2019?
It's been an OK year for shareholders, with Saracen Minerals shares climbing 16.49% higher to $3.39 per share.
However, that still means the company has underperformed the benchmark S&P/ASX 200 Index (INDEXASX: XJO) in 2019.
Compared to some of its ASX gold mining peers like St Barbara Ltd (ASX: SBM), however, Saracen Minerals shares have performed quite well.
It will be interesting to see how the market weighs the additional equity raising against the possible value-add of the new Super Pit acquisition.
