One of Australia’s premier gold producers St Barbara Ltd [ASX:SBM] has shed 15.36% to trade at $2.81 earlier today. The miner’s share price has tumbled almost 40% since the beginning of the year.
St Barbara share price was slashed by nearly 30% in March when the company announced disappointing results of its feasibility study at its Gwalia Mass project.
Source: Market Index
What’s happened to St Barbara share price?
Gold miners across the ASX have traded lower this morning on the back of a weaker gold price. The spot gold price dropped 0.85% to US$1,286.70 an ounce after trade fears eased.
SBM announced this morning it had completed a $355 million entitlement offer to institutional investors. The offer price was $2.89 per share, a 13% discount to the previous close price of $3.32. Existing shareholders took up approximately 81% of the new shares.
The gold miner has scrambled to diversify its assets after the company flunked on its Gwalia Mass feasibility study. Today’s institutional entitlement offer represents the first stage of St Barbara’s underwritten entitlement offer which is expected to raise approximately $490 million.
The net proceeds of the entitlement offer are intended to be used to partly fund the acquisition of Atlantic Gold Corporation and pay associated transaction costs.
However, the negative sentiment surrounding the company has seen the share price fall well below the offer price to institutional investors, likely depressed by and exodus of investors who can no longer stomach the risk.
What’s next for SBM?
Funds raised were to help acquire listed Canadian gold producer Atlantic Gold Corporation, which operates the Moose River Consolidated mine in Nova Scotia, which was announced on 15 May.
According to SBM, Atlantic Gold Corporation is a TSX-listed growth-oriented gold development group with a long-term strategy to build a mid-tier gold production company.
St Barbara’s offer valued Atlantic Gold Corporation at $768 million on an equity value basis. The miner also secured a new $200 million loan from Westpac Banking Corp. Atlantic Gold was advised by Canaccord Genuity and Canada’s National Bank Financial.
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