PERTH (miningweekly.com) – Gold producer Alkane Resources will claim a stake in fellow-listed Genesis Minerals, investing up to A$6-million.

The investment by Alkane formed part of a larger capital raise by Genesis, under which the company was aiming to raise some A$7.5-million to fund exploration and development at its Ulysses gold project, in Western Australia.

Alkane on Friday told shareholders that the company would take an initial 5.82% interest in Genesis by investing A$1.42-million in exchange for 44.33-million shares, priced at 3.2c each.

Genesis is also undertaking a one-for-six renounceable rights issue, to raise up to A$6.05-million, with Alkane partially underwriting the rights issue to A$4.6-million.

Alkane has committed to take up its full entitlement under the rights issue.

Should Alkane’s investment in Genesis not meet its A$6-million ceiling following the rights issue, and its interest in Genesis remained under 15%, a second share placement, priced at 3.2c a share, would follow, taking Alkane’s interest in Genesis to 15%.

The secondary share placement will be subject to Genesis shareholder approval.

Alkane MD Nic Earner on Friday said that the investment in Genesis was consistent with the company’s strategic objective to grow the gold business, both organically through its Tomingley gold operation, in New South Wales, and through investment in junior gold companies with projects that met Alkane’s investment criteria.

“Alkane has maintained a small stake in Genesis since 2018 and we have followed the recent progress of its flagship Ulysses gold project in particular. We welcome the opportunity to expand our investment to become a supportive strategic shareholder.”

Genesis MD Michael Fowler said that the company was pleased to have secured the strategic partnership with Alkane.

He noted that the proceeds of the placement would de-risk Genesis’ balance sheet and give the company the flexibility to pursue an aggressive exploration, development and growth strategy in the Leonora region, underpinned by its existing high-grade resource at the Ulysses gold project.

“We will pursue a multi-pronged strategy which includes infill drilling to de-risk the resource and underpin ongoing feasibility studies, extensional drilling to grow the resource base, and regional exploration to expand our overall resource base.

“At the same time, we will have the capacity to pursue acquisition opportunities where these make sense, to expand our sphere of influence as an emerging gold company.”