PERTH (miningweekly.com) – ASX-listed De Grey Mining is hoping to raise A$22-million to fund the acquisition of the Indee gold project, in Western Australia.

De Grey at the start of 2017 struck a deal with Northwest Nonferrous Australia Mining to acquire its wholly-owned subsidiary Indee Gold, which holds the Indee Gold asset to the immediate west of De Grey’s Turner River project, for A$15-million.

In the intervening time, De Grey has explored and upgraded the resource at the Indee project, which has resulted in a final acquisition price of some A$13.14/oz.

The two companies have also worked on extensions, part payments and an equity component to the final settlement price, which now comprises A$9.7-million in cash and the issue of A$3-million worth of De Grey shares.

De Grey said on Thursday that the price of the shares was yet to be determined, but would be at 90% of the volume weighted average price for the 20 trading days prior to settlement, which is now scheduled to occur before August 24.

To complete the acquisition of Indee Gold, De Grey has announced a capital raising consisting of a share placement and a fully underwritten pro-rata renounceable entitlement offer.

The placement of 60.3-million shares to sophisticated and professional investors, at a price of 5c a share, is expected to raise an initial A$3-million.

Under the entitlement offer, all shareholders would be allowed to subscribe for one new share in De Grey for every 1.28 shares held, also priced at 5c a share, with the aim of raising a further A$19.1-million.

ASX-listed DGO Gold, which holds a 5.9% interest in De Grey, on Thursday said that it would increase its investment in the gold junior, subscribing for six-million shares in the placement, and taking up its full entitlement in the entitlement offer of around 24-million shares.

In addition, DGO has agreed to sub-underwrite the entitlement issue for a further 70-million shares.

DGO noted that its shareholding in De Grey could potentially increase, depending on any shortfall in shareholder uptake of the entitlement offer.

At the completion of the placement component of the capital rise, DGO would have the right to nominate two directors to the De Grey board, who will fill vacancies left by retiring directors.

De Grey executive chairperson Simon Lill on Thursday welcomed the A$5-million investment by DGO, and said that the capital raising had been structured and priced to encourage all sharehodlers to support the raising, while ensuring completion of the required capital raising via the fully underwritten backing of Bell Porter.

“The De Grey board encourages all shareholders to support this offer,” Lill said.