The Gascoyne Resources Ltd (ASX: GCY) share price has returned from its suspension and crashed deep into the red.
At one stage today, the ASX gold miner's shares were down as much as 49% to 9.9 cents.
The Gascoyne Resources share price has recovered a touch since then but remains down 43% at 11.2 cents.
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Why is this ASX gold share crashing?
Investors have been selling down this ASX gold share on Thursday after it completed a highly dilutive capital raising.
According to the release, the company has raised gross proceeds of $17.8 million following the settlement of an institutional placement and accelerated institutional entitlement offer. These funds were raised at 10 cents per new share, which represents a 48.7% discount to its last close price.
The company will now look to raise a further $8.5 million from retail investors at the same price.
Why is it raising funds?
The company intends to use the proceeds of the capital raising to support its "exciting" Never Never gold deposit.
Gascoyne Resources' Managing Director and CEO, Simon Lawson, commented:
The strong support for the equity raising reinforces the value of Gascoyne's portfolio and validates the steps taken by management late last year to preserve shareholder value through placing the Dalgaranga gold mine on care and maintenance.
We believe we have a very exciting future as Gascoyne is fully funded through to mid-2024 and is able to spend considerable time and money on delineating and expanding the exciting high-grade Never Never gold deposit.
The ASX gold share also notes that Never Never is expected to be the cornerstone of a new, higher-grade mine plan with a restart decision at Dalgaranga targeted for the second half of 2024.
