PERTH (miningweekly.com) – ASX-listed Strickland Metals has announced a A$12-million capital raise to underpin the purchase of the Millrose gold project, in Western Australia, increasing the company’s resource base to over 600 000 oz of gold in the Yandal belt.

Strickland on Wednesday reported that it had entered into a binding term sheet with Millrose Gold Mines and Golden Eagle Mining to acquire the Millrose gold project, adjacent to its own Horse Well project and the soon to be acquired Yandal East gold project.

Strickland would pay A$1-million in cash on the signing of the term sheet, and a further A$5-million within three months of the initial payment, while a further A$4-million is due three months after the second payment.

A further A$4-million is also payable either in cash, or in A$2-million cash and A$2-million fully paid ordinary shares in Strickland. The share price for these shares would be calculated based on a volume weighted average price of the shares at the close of trading on the 20 days prior to the third payment date.

To fund the acquisition, Strickland will raise A$8-million in a share placement, as well as some A$4.2-million in a one-for-seven fully underwritten non-renounceable pro-rata entitlement offer.

The company told shareholders that it had received firm commitments for the placement of 200-million fully paid ordinary shares, at a price of 4c each, from institutional and sophisticated investors.

Shareholders would also be given the opportunity to partake in the capital raise, and could subscribe for one new fully paid ordinary share for every seven shares held, also at a price of 4c each.

The rights issue will close in July 26, unless extended.

Shareholder approval would not be required for the capital raise, Strickland said.

In addition to funding the Millrose purchase, the funds raised will also go towards exploration at the company’s existing and newly acquired projects, and to fund a portion of its working capital.