PERTH (miningweekly.com) – Junior gold explorer Red 5 was looking to raise more than A$47-million through a rights issue to fund the return of production at its Siana gold mine, in the Philippines.

The entitlement offer would allow shareholders to purchase one new share for every share held, at an issue price of 35c each.

The offer price was a 43.5% discount to the closing price of Red 5’s shares on April 24, when the company suspended share trading.

The company said in a statement that given the current challenging environment in the equity markets, shareholder support was necessary to provide the cash injection to repay the company’s outstanding prepaid swap facility and to implement interim tailings storage solutions that would lead to the restart of mining operations and gold production at Siana.

“We have a solution of returning to production at Siana and a rights issue is the best way to ensure all shareholders who have seen the project come so far in recent years, play an equal role in funding our short-term capital needs,” said MD Steve Norregaard.

He noted that, after the operator and contractor changes earlier this year, Red 5 had a quality asset in need of additional capital.

“Despite recent fluctuations in the gold market, Siana’s fundamentals as a lowest-quartile-cost gold mine make it a very attractive asset. Returning to production is the best way to realise this value,” Norregaard said.

Red 5 told shareholders that the construction of a small interim lined storage pond would provide a tailings capacity for up to four months, followed by a thickening and filtering system to create a cemented past product, which would provide a stable tailings and waste land form.

The co-deposition storage method would be able to accommodate a minimum of 18 months of tailings storage prior to the completion of a new purpose-built facility.

The company noted that the combination of deposition methods could potentially see the Siana process plant restart operations by October this year.