Musgrave Minerals Share Price Sinks on Capital Raise (ASX:MGV)
Musgrave Minerals Ltd [ASX:MGV] shares have sunk to their lowest point in more than six months on the back of the company’s latest capital raise.
When we looked at the MGV share price last week it was showing some signs of recovery, although that momentum may have faded.
With trading resumed in MGV shares today after being placed in a trading halt on Thursday, the share price has shed 12.47% or 5.3 cents at time of writing to trade at 37 cents per share.
Should you be worried?
MGV announced this morning that they are planning to raise $18 million to fund resource growth and commence the pre-feasibility study at the Cue Gold Project.
The gold explorer said they have already received commitments of $16 million via a strongly supported placement to corporate, institutional and sophisticated investors.
The outstanding $2 million will be raised via a share purchase plan (SPP) for all eligible shareholders.
MGV has set a price for the newly issued shares at 36 cents per share, representing a 15.3% discount to the last traded price and a 9.6% discount to the 15-day volume weighted average price.
Shares have fallen today to just above the offer price, which is expected.
MGV said half of the funds raised would be used in further resource growth at Cue, with $4 million set aside for the pre-feasibility study.
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The rest will be used for resources definition and boosting general working capital.
Things getting set at Cue
Activities at Cue look set to ramp up next year with MGV announcing plans to obtain approval for mining at the Break of Day and Lena deposits.
MGV shares could be worth watching over the next few months with the return of better than expected results from its regional drilling program.
The explorer will drill a further ~30,000 metres to test the multiple high-grade and high-priority targets identified to date, including the new high-grade White Heat gold discovery.
Musgrave’s Managing Director Rob Waugh said:
‘Through accelerated exploration and a focus on resource growth we can ensure we unlock the value of the project as a strategic asset. This work together with the prefeasibility study on the existing high-grade, near-surface Break of Day resource and the adjacent Lena deposit, will maximise our ability to create value for shareholders through discovery, resource growth and project development.’
We have closely followed several microcap gold explorers who have turned up impressive resources here at The Daily Reckoning Australia, with MGV being one of the first to begin the transition to development during this time of historic gold prices. If you’re interested in what comes next for these Aussie gold stocks, check out our free report on why Australia could become the next gold epicentre and the flow-on effects for Aussie gold stocks. Get your copy here.
For The Daily Reckoning Australia