PERTH (miningweekly.com) – Gold miner Red 5 will raise A$60-milion in a two-tranche share placement to support the ramp-up of its King of the Hills (KOTH) gold mine, in Western Australia.

The ASX-listed company on Monday said it had received firm commitments for the placement of 375-million new fully paid ordinary shares, at a price of 16c each.

The first tranche of more than 354-million shares would be placed under the company’s existing placement capacity, raising an initial A$56.7-million, while the second tranche of more than 20.6-million shares, to raise a further A$3.3-million, would be subject to shareholder approval at a meeting scheduled for November.

The placement price of 16c a share represented a 15.8% discount to Red 5’s last trading price on the ASX, and a 23% discount to the company’s five-day volume-weighted average share price.

“We are delighted with the support received for the placement and the company is also pleased to offer existing eligible shareholders on the record date the opportunity to subscribe under a share purchase plan (SPP)at the same price as the placement,” said MD Mark Williams.

The SPP will allow shareholders to subscribe for an additional A$30 000 worth of new shares in the company, also at a price of 16c a share, in an effort to raise a further A$6-million.

The SPP will open on October 10 and close on October 27.

“KOTH was delivered within budget and first gold poured on schedule in June 2022. Commercial production and steady-state operations is expected to be achieved during the December quarter,” said Williams.

“The proceeds of this capital raise will strengthen our balance sheet and provide additional working capital to support the completion of the ramp-up of the KOTH plant. The funds will also allow us to pursue additional growth initiatives, including ongoing drilling and a KOTH process plant expansion feasibility study to determine the optimum long-term plant capacity.”

The initial mine plan for KOTH estimated a mine life of 16 years, with gold production in years one to six expected to average 176 000 oz/y, while peak annual gold production of 203 000 oz/y will be achieved in 2024, benefitting from underground mining of one-million tonnes a year in years one to four.