PERTH (miningweekly.com) – South African gold miner AngloGold Ashanti will increase its shareholding in ASX-listed Orinoco Gold by taking part in a capital raise.
Orinoco on Wednesday launched a fully underwritten one-for-two nonrenounceable entitlement issue, priced at 2c each, to raise A$4.98-million.
AngloGold, which already holds a 17.1% interest in Orinoco, has entered into a priority sub-underwriting agreement to subscribe for A$1-million of the entitlement issue, taking its ownership in Orinoco to 18.1%.
In addition, AngloGold has also made a A$3-million pre-payment against its $9.5-million exploration earn-in agreement with Orinoco over the Faina Goldfields project, in Brazil, taking its total commitment as part of the capital raise to A$4-million.
The balance of the earn-in commitment will be spent to earn a 70% interest in the Faina Goldfields tenement area. However, with AngloGold completing an early payment, Orinoco has agreed to remove any yearly staged spending milestones, with AngloGold only obligated to spend the amended total exploration spend of around $7.16-million by the end of the 36 months from the date of the formal earn-in agreement.
Orinoco CEO Craig Dawson said that the ongoing support of AngloGold reflected the long-term potential of the Faina greenstone belt, as well as the quality of the company’s assets and the strength of the working relationship between the companies.
“AngloGold share our vision for the Fiana project and they have again demonstrated their willingness to support the company as a cornerstone investor in this milestone capital raising, which comes at a pivotal time in the company’s history.”
Orinoco said that proceeds from the capital would be used to strengthen the company’s working capital position at the Cascavel mine, in Brazil, where processing operations had recently restarted, following operational enhancements and improvements at the operation after mining and processing was suspended in the fourth quarter of last year.
Furthermore, Orinoco will use the funds to gain full ownership of the Cascavel project, acquiring the outstanding 30% interest from its minority partners.