PERTH (miningweekly.com) – Gold miner Calidus Resources on Friday announced plans to raise up to A$28-million in a share placement and share purchase plan (SPP) to help fund the expansion of its Warrawoona gold project in Western Australia.

The ASX-listed company has received firm commitments for the placement of 109.8-million shares, at a price of 21c each from institutional, sophisticated and professional investors, raising an initial A$23-million.

Each participant in the placement will also receive a one-for-two free attaching option, exercisable at 30c each with a 15-month term.

The share placement will be done under Calidus’ existing placement capacity, and as such would not require shareholder approval. The company’s largest shareholder, Alkane Resources has subscribed for A$2.5-million of the placement shares.

Furthermore, Macmahon Holdings, the contractor at Warrawoona, has elected to convert some A$10.5-million of its existing creditor position into equity at the same price as the placement.

Macmahon said on Friday that the ownership in Calidus would provide upside to improving project performance at which is consistent with Macmahon’s intention to leverage opportunities to further integrate with key clients, reinforce our core business and generate increasing shareholder value.

“We are confident that by our participation in the Calidus capital raise, and with a deep understanding of the operation, we will be able to contribute to the successful growth of their business as the surface mining contractor at Warrawoona. We value the relationship we have forged with Calidus which we are seeking to expand and welcome the opportunity to share in the company’s emerging growth prospects,” said Macmahon CEO and MD Michael Finnegan.

In addition to the share placement, Calidus will also undertake an SPP to raise an additional A$5-million. Under the SPP, eligible shareholders would be invited to subscribe for up to A$30 000 of new shares in the company, also at a price of 21c each.

“Calidus will emerge from this highly successful raising in an enviable position,” said MD Dave Reeves on Friday.

“It helps ensure we can implement our strategy to grow production to 130 000 oz/y while maintaining a conservative balance sheet and generating strong cashflow. This means we can leverage our existing infrastructure, generate greater economies of scale and unlock the underlying value of the large inventory we have established through our successful exploration programmes.

“Organic growth of this nature maximises shareholder returns while reducing costs, lowering risk and increasing cashflow.”

Calidus in January declared commercial production at Warrawona, and the project is expected to produce up to 105 000 oz of gold a year, but could potentially produce up to 139 000 oz/y when the nearby Blue Spec deposit is developed.