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After gold prices recently reached their highest levels in 7.5 years, Australia's largest gold miner is seeking extra liquidity to boost its exposure to the precious metal.
Newcrest Mining (ASX: NWC) has announced a $1.1 billion capital raising today of which the majority will fund the acquisition of the gold prepay, stream facilities and an offtake agreement for Lundin Gold Inc's Fruta del Norte project in Ecuador.
The company made the acqusition today for US$460 million (AUD$703.5 million).
"The acquisition is expected to be earnings accretive with the gold prepay and stream facilities expected to provide Newcrest with economic exposure to approximately 400,000 ounces of gold from the mine between 2020 and 2026," says Newcrest managing director and chief executive officer Sandeep Biswas.
"With gold prices at the levels we see today, Newcrest expects to receive significant cash flows which will rank ahead of Lundin Gold's equity holders."
The remainder of the raising will be used to fund future growth options such as the construction of declines at Havieron in Western Australia and Red Chris in British Columbia, Canada, where mining has been declared an essential service.
The equity raising, comprising $1 billion fully underwritten institutional placement and a share purchase plan (SPP) targeting up to $100 million, is set to dilute ownership by 5.1 per cent.
The placement will take place at $25.6 per share, representing a 7 per cent discount to the last trading price.
The funds will add to around US$1.4 billion (AUD$2.14 billion) of cash on hand for the miner as at 31 March, along with access to the same amount again undrawn committed bank facilities.
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