Shares in Shanta Gold dropped like a stone after it went back to equity markets to raise another 30 million dollars 'to address short-term financing requirements'.
The firm also said initial production had been lower than anticipated at its flagship New Luika Gold Mine in Tanzania.
MoneyWeek
Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE
Sign up to Money Morning
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
This had resulted in reduced recoveries and a "lock up" of the gold in the plant.
Shares were down almost 11% after it announced the offer of at least 80m new shares to institutional and other investors.
The firm said the placing would be used for short term financing during the ramp up New Luika.
In April the firm raised $35m for similar reasons.
Shanta said the money would be split between $14m in payments due, $12m of fourth quarter operating costs, $5m of project finalisation capex, $7m of debt repayment and $4m of general working capital and transactional expenses.
"The placing provides the company with the flexibility to consider the suitability and attractiveness of additional alternative sources of non-dilutive financing which are currently under consideration as well as providing the flexibility to consider value enhancing corporate transactions," the company said.
-
Nationwide Building Society launches £175 switching deal – who is eligible?Nationwide Building Society has launched a new current account switching deal. We look at whether you are eligible, and how to get the free cash.
-
Barclays launches £500 cashback offer for ISAs - but there's a catch. Here's how it worksBarclays is looking to attract savers to its cash ISA range but you need a lot of money to get the full reward
