Capital Market and Gold: One Example Under Spotlight, Bellevue Gold Limited

  • Jul 09, 2020 AEST
  • Team Kalkine
Capital Market and Gold: One Example Under Spotlight, Bellevue Gold Limited

Summary

  • Gold prices are vaulting higher, reaching a new multi-year high of USD 1,818.13 per ounce
  • Bellevue Gold launched an institutional placement to raise ~ A$ 100 million before costs, with a Share Purchase Plan to raise up to A$ 20 million due to open on 20 July 2020
  • Proceeds raised are planned to be directed towards aggressive exploration campaign at the Company’s flagship Bellevue Gold Project to upgrade and increase resources
  • Bellevue Gold Project in tier 1 world-class gold jurisdiction is one of the fastest growing resources in Australia, and has a maiden Indicated Resource of 860,000oz at 11.6 grams per tonne of gold

In the wake of ongoing uncertainty around COVID-19, gold prices are going up with each passing day, reaching a new multi-year high of USD 1,818.13 per ounce on 8 July 2020 and currently hovering around the same at USD 1,818.13 on 9 July 2020 (3:29 PM AEST). Backed by a strong rally in gold prices, several ASX-listed gold stocks are also getting traction.

In this backdrop, let us discuss West Australian gold exploration company Bellevue Gold Limited (ASX: BGL), which has announced an equity raising program for up to A$ 120 million, to grow resources and speed up the development of its flagship Bellevue Gold Project in the globally recognised tier-1 mining jurisdiction of Western Australia.

Details - Institutional Placement and SPP

Institutional Placement - Bellevue Gold is targeting to raise approximately A$ 100 million through a fully underwritten institutional placement of new fully paid ordinary shares at a price of A$ 1.00 a share to eligible institutional and professional investors.

The issue price represents a discount of 10.7 per cent to A$ 1.12, the last traded price of BGL, and a discount of 5.7 per cent to its 2-day volume weighted average price (VWAP) of A$ 1.06 as at 8 July 2020. Settlement and allotment of placement shares is expected on 14 July and 15 July 2020, respectively.

The placement is fully underwritten by Canaccord Genuity (Australia) Limited and Macquarie Capital (Australia) Limited.

Share Purchase Plan - Following the institutional placement completion, the Company plans to roll out a non-underwritten Share Purchase Plan (SPP) for eligible shareholders in Australia and New Zealand. The SPP, under which shares will be offered at A$ 1.00 a share, will be targeted towards raising up to A$ 20 million.

The offer period under SPP is expected to be open from 20 July 2020 to 7 August 2020, with the issue of new shares expected on 18 August 2020.

Use of Proceeds – Funds raised are planned to be directed towards exploiting the competitive advantages of high-grade Bellevue Gold Project to accelerate resource growth and project development.

The Company intends to use the funds for:

  • Growth of the existing 2.3Moz Resource at the project
  • Further expand the Indicated Resource of 860,000oz at 11.6 grams per tonne and grow the high-grade core of 480,000oz at 15.5 grams per tonne by upgrading more of the Inferred Resource
  • Ongoing step out exploration for further discoveries, resource growth and infill drilling
  • Fund underground mine development, including production decline and infrastructure
  • Non-process infrastructure including camp, road upgrades, power and communication upgrades
  • General working capital requirements and offer costs

Now that we know the Company’s equity raising program in detail, let us skim through its flagship Bellevue Gold Project.

Bellevue Gold Project - A Globally Significant High-Grade Resource

Bellevue Gold Project is a globally significant high-grade resource and one of the fastest growing resources in Australia, as highlighted by the Company in its latest investor presentation on 9 July 2020.

Located to the township of Leinster in the Western Australian region of Goldfields, the project sits in a major gold and nickel producing district with mines like Thunderbox of Saracen Mineral Holdings Limited (ASX: SAR) and Jundee of Northern Star Resources Limited (ASX: NST).

Related: Elevated Gold Spot Prices Transcending into Strong Financial Position for Saracen and Northern Star

For Bellevue Gold Project, which represents a unique, high-quality asset and investment opportunity, the Company, on 7 July 2020, announced a maiden Indicated Resource of 860,000oz at 11.6 grams per tonne of gold, with the resource forming part of the Company’s total 2.3Moz global Resource at 10 grams per tonne.

The reported Resource has been estimated on drilling completed up to mid-June 2020 and had completed the first significant infill drill program at the project.

Besides existing resources remaining open in all directions, there are a range of exciting greenfield opportunities. Through step out drilling, the Company intends to grow the Resource and has commenced exploration within the 20km Bellevue mine corridor. Approximately 10,000m has been planned for the 20km Bellevue strike. Moreover, complete Bellevue system is untested at depth below approximately 650m and mineralisation is projected to continue at depth.

Assuming successful completion of the Placement and SPP pre-offer costs, the Company holds strong cash balance of A$ 143 million to increase resource, progress exploration, and accelerate development activities.

Economic studies on the project are well underway, with the studies’ completion expected to mark the transition to the project development phase, according to Mr Parsons. With the equity raising program providing funding and flexibility to accelerate development and activities at Bellevue Gold Project, the Company is expecting to finalise economic studies in the first quarter of 2021.

Stock Information – BGL stock last traded at A$ 1.120 on 8 July 2020, with a market capitalisation of A$ 766.7 million and 684.55 million outstanding shares.

Must Read: Greatest Discoveries in Gold: ASX Stocks on the charter

 


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