Deccan Gold Mines tanks after raising rights issue price

Deccan Gold Mines was locked at 10% lower circuit at Rs 69.05 at 15:30 IST on BSE after the company's board of directors have revised upwards the proposed rights issue price to Rs 17 per share from earlier Rs 15 per share.

The announcement was made on Saturday, 22 August 2015.

Meanwhile, the BSE Sensex was down 1,537.87 points, or 5.62%, to 25,815.41.

On BSE, so far 2.56 lakh shares were traded in the counter, compared with an average volume of 1.95 lakh shares in the past one quarter.

The stock hit a low of Rs 75 and a high of Rs 69.05 in intraday trade. The stock hit a 52-week high of Rs 91.50 on 5 August 2015. The stock hit a 52-week low of Rs 19.15 on 4 September 2014.

The stock had outperformed the market over the past one month till 21 August 2015, jumping 67.28% compared with 2.9% fall in the Sensex. The scrip had also outperformed the market in past one quarter, surging 99.48% as against Sensex's 1.59% decline.

The small-cap company has an equity capital of Rs 5.92 crore. Face value per share is Re 1.

Deccan Gold Mines said that the board of directors of the company at its meeting held on 22 August 2015, have revised upwards the proposed rights issue price to Rs 17 per share. It may be noted that the company had earlier announced a 1:2 rights issue at an issue price of Rs 15 per share.

Due to the revision in issue price, the issue size will get revised from Rs 44.41 crore (2.96 crore shares at Rs 15) to Rs 50.33 crore (2.96 crore shares at Rs 17) an increase of Rs 5.92 crore. The additional funds are sought to be utilized by the company for general corporate purpose and investment in subsidiary to establish a presence in Australia to facilitate the recruitment of technical personnel and access to other mining resources for development of gold projects.

The rights issue price of Rs 17 per share, is at a discount of 75.38% to the current ruling price.

Deccan Gold Mines (DGML) is the gold exploration company which was established in the year 2003 by promoters with deep roots in the exploration and mining sector. DGML has been involved in gold exploration activities in the states of Karnataka and Andhra Pradesh where the activities have resulted in defining a number of gold prospects spread across these states.

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