PERTH (miningweekly.com) – Junior Ausgold has announced plans to raise A$12-million in a share placement to fund resource expansion drilling at its Katanning gold project in Western Australia, and to complete feasibility and scoping studies.

The ASX-listed company has received firm commitments for the issue of more than 266.6-million new shares, at a price of 4.5c each, with the placement price representing a 6.3% discount to the company’s last trading price.

The shares will be issued under the company’s existing capacity and will not require shareholder approval.

The placement has been strongly supported by shareholder Dundee Corporation, which will maintain a 12.5% interest in the company, as well as Jupiter Asset Management, which has increased its shareholding in the company to 9.5%.

Ausgold MD Matthew Greentree told shareholders that proceeds from the placement would be used to continue resource expansion drilling and regional exploration work, and to complete the definitive feasibility study (DFS) at the Katanning project, as well as a scoping study for an increased throughput rate at Katanning.

“Recent high-grade drilling results have shown that the Katanning gold project is capable of supporting a materially larger operation. This placement enables Ausgold to advance a number of high-value workstreams, including a scoping study to assess our strong view that Katanning is able to support a long-term mine life exceeding 150 000 oz/y of gold production, along with a DFS for the project.

“The knowledge gained from these workstreams will be a critical input for our strategic review to unlock the considerable value of Kattaning for our new and existing shareholders. The company is in a fantastic position to become Australia’s next midtier gold producer underpinned by excellent financial metrics demonstrating low cost, low technical risk, and a high-margin operation.”