The Bellevue Gold Ltd (ASX: BGL) share price has returned from its trading halt and is crashing deep into the red.
In morning trade, the ASX 200 gold stock is down a sizeable 27% to $1.33.
Image source: Getty Images
Why is this ASX 200 gold stock crashing?
There are a couple of reasons why this gold miner's shares are ending the week in a disappointing fashion.
One is a sharp pullback in the gold price overnight, which is weighing heavily on the gold sector.
For example, the S&P/ASX All Ordinaries Gold index is down 2.1% at the time of writing.
In addition, this morning the ASX 200 gold stock revealed that it has received firm commitments for a $150 million fully underwritten institutional placement.
According to the release, Bellevue Gold is raising the funds at $1.55 per share, which represents a 15.3% discount to where its shares last traded.
Management notes that the placement received very strong support from existing and new leading domestic and offshore institutions. In fact, the overall demand received for new shares was "strongly" in excess of the $150 million placement size.
Why is Bellevue Gold raising funds?
The company advised that placement proceeds will be used to repay debt, unlocking project free cash flow to allow it to self-fund its expansion in line with its updated five-year growth plan, and to support accelerated exploration and growth.
That updated growth plan could also be weighing on its shares today. Management is guiding to significantly higher than expected costs in FY 2025.
Nevertheless, the ASX 200 gold stock's managing director and CEO, Darren Stralow, was pleased with everything. He commented:
We are extremely pleased with the very strong support for the Placement from both our shareholders as well as new investors. With the benefit of the enhanced financial flexibility we now have, our team's focus will continue to be on unlocking the capability and value of this special mining operation by materially growing production and reducing costs, in order to maximise free cash flows and returns for our shareholders.
We are also excited about the opportunity to recommence exploration at the Bellevue Gold Project, following two years of very limited exploration during commissioning and ramp up, with a number of highly prospective opportunities to grow the Resource.
The company will now push ahead with a share purchase plan (SPP). This will see Bellevue Gold seek to raise a further $25 million from retail shareholders at the same price as the institutional placement.
This ASX 200 gold stock is now down 8% since this time last year.
