Following the capital raising news, Macquarie Research reiterated its outperform recommendation with a 12-month price target of 90 cents (current share price: 42 cents).
In Bellevue managing director Steve Parsons’ words “To complete a raising such as this in any environment is an excellent achievement but to do it in the current market circumstances is exceptional.”
He added: “Under the current budget, we are funded through to mid calendar year 2021.”
Last week, Parsons exercised about 20 million unlisted options to acquire Bellevue shares worth about $8.4 million based on current share price.
Following is an extract from Macquarie’s research update:
- BGL has received firm commitments to raise A$26.5m at 30c/sh, representing a 7.7% discount to the last trade price of 32.5c.
- Funded for the next phase: BGL has received firm commitments to raise A$26.5m at 30c/sh, representing a 7.7% discount to the last trade price of 32.5c. BGL plans to use the proceeds to further infill and grow Bellevue’s resource and undertake economic studies to prepare for an eventual development scenario. We note that we had previously expected BGL to raise A$27.5m at 31.5c this quarter. BGL notes that the capital raise will provide adequate funding through to mid-2021.
- Inferred resource on track: BGL notes that the initial infill drilling program at Bellevue is now complete and remains on track to publish its maiden indicated resource in 4QFY20. BGL’s next phase of drilling is planned to grow this upcoming indicated resource. Step out drilling will also be undertaken to grow the overall resource which now stands at 6.1Mt at 11.3gpt for 2.2 million ounces of gold. Two promising geophysical conductors will be targeted with exploration drilling.
Action and recommendation
- Maintain Outperform. Raising capital in this difficult time will prove invaluable to maintain BGL’s drilling programs while also transitioning into a study phase for future development. A significant amount of drilling has been completed in recent months and the company has developed a robust understanding of geology at Bellevue. This will culminate in an initial indicated resource in the next quarter. The maiden resource a Deacon is open along strike and at depth and highlights the potential for further resource growth at Bellevue.