Bellevue Gold raises funds, weighs options after weak quarter
Australia’s Bellevue Gold (ASX: BGL) has emerged from a trading suspension with a weaker outlook for its namesake gold mine in Western Australia and announced a A$156.5 million equity raising to repair its balance sheet and close out hedge contracts, following a disappointing March quarter. The company had been in a trading halt for more than two weeks ahead of a guidance downgrade and capital raising. Its shares had already dropped 14% in the two days before the halt, reflecting market unease about the mine’s ramp-up.Even Bellevue’s mining contractor, Develop Global (ASX: DVP), had to release a statement last week due to “rumours circulating in the investment community”, reaffirming its strong relationship with the company and noting the producer was up to date with its contract payments. Production at the Bellevue mine, the company’s flagship operation, fell well short of expectations in the March quarter, delivering 25,146 ounces of gold—about 30% below market forecasts. The company blamed the weak result on operational and geological issues, including the deferral of high-grade zones, dilution, and poor grade performance in three stopes on the outer fringes of the orebody. The result triggered a cash outflow of roughly A$32 million, reducing its cash and bullion position to A$49 million at March 31, down from A$81 million three months earlier.The Bellevue mine, in Western Australia’s Goldfields region, started production October 2023 and reached commercial production in May 2024, achieving its June 2024 half-year guidance of 80,000 ounces of gold. Now the company has cut full-year guidance for the second time this year. It expects to produce 129,000–134,000 ounces of gold at significantly higher all-in sustaining costs (AISC) of A$2,425–A$2,525 per ounce. This follows an earlier downgrade in January to 150,000–165,000 ounces from 165,000–180,000 ounces, after producing just 65,600 ounces in the first half.Bellevue said the March quarter challenges were “isolated” and that it has de-risked its June quarter mine plan, targeting 40,000–45,000 gold ounces. The company, however, has walked back its near-term production ambitions, now guiding to around 150,000oz in fiscal year 2026, down from a previously stated goal of reaching a 200,000oz annualized run rate in the June quarter. A five-year plan aiming for 250,000oz of annual production by FY28 has been withdrawn.An expansion of its processing plant from 1Mtpa to 1.6Mtpa has also been paused, reducing growth capital expenditure by A$75 million. Expected production from FY27–FY29 is now projected at around 190,000oz annually.Balance sheet repair In July last year, Bellevue unsettled the market by announcing a surprise A$175 million equity raising, most of which was used to reduce its Macquarie Bank debt facility by A$120 million to around A$100 million. A quarterly production-based test at the end of March triggered a loan review, which Macquarie agreed to waive following a review of the revised Bellevue mine plan.To strengthen its balance sheet, Bellevue launched on Monday a fully underwritten placement at A$0.85 per share—a 25.8% discount to its last traded price of A$1.145 on March 26. The raise is being backed by Canaccord Genuity, UBS and Argonaut PCF. Of the proceeds, A$110.5 million will be used to close near-term hedge positions, allowing Bellevue to regain exposure to high spot gold prices, currently near A$5100/oz.Bellevue had hedged 193,800oz of gold at an average price of A$2835/oz through 2027, well below current market prices. Bell Potter Securities estimates hedging losses of about A$52 million for the December 2024 half-year. As part of the restructure, some contracts have been pushed to the March 2028 quarter at a restructured average forward price of A$3380/oz. The remaining A$40 million from the raise will bolster the company’s cash position to A$89 million.“Alongside the updated mine plan, the strengthened balance sheet and close out of near-term hedge contracts provides Bellevue with increased exposure to record spot gold prices through to the end of 2025,” Bellevue managing director Darren Stralow said in a statement. “Coupled with the support of our funding partner, we are well funded to deliver significantly improved production and generate strong free cashflow for the remainder of the June quarter and through FY26.” Review underway In parallel with the capital raising, Bellevue has launched a strategic review to explore options to “maximize value for shareholders,” including operational improvements and a path to long-term profitability. The company revealed it had received unsolicited takeover interest, although no formal offers have been made. It has appointed UBS, the Lisle Group and King & Wood Mallesons as advisors.Chief operating officer Bill Stirling will step down, though he will remain with the company during the transition to a new appointment.Bellevue shares are expected to resume trading on Tuesday.Weiter zum vollständigen Artikel bei Mining.com
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