PERTH (miningweekly.com) - Gold developer Wiluna Mining has announced a major capital raising initiative to fund the Stage 1 development of its Wiluna project, in Western Australia.

The ASX-listed company on Thursday said that it would raise an initial A$7.5-million to sophisticated investors. The share placement would be made under the company’s existing placement capacity, and will be priced at A$1 a share.

In addition, Wiluna is also hoping to raise up to A$31.5-million under a one-for-four non-renounceable entitlement issue, which will also be priced at A$1 a share.

Major shareholders and Wiluna executive chairperson Milan Jerkovic, have indicated that they would take up their entitlements in full, raising a combined A$14-million under the entitlement offer.

The entitlement offer is expected to close on May 7.

Meanwhile, Wiluna told shareholders that there was potential to advance the company’s existing finance facility with Mercuria Energy Trading by an additional A$40-million to contribute to funding the Stage 1 development of the Wiluna operation, subject to Mercuria’s credit approval process.

A signed, indicative, non-binding term sheet is being progressed, with the intention of financial completion subject to certain conditions precedent and mandatory approvals.

Capital raised will go towards the construction and commissioning of the Stage 1 concentrator and mine, to deliver some 120 000 oz/y of production, as well as to fund feasibility work associated with the staged development programme to achieve a gold production of 250 000 oz/y.

Wiluna recently reported a 142% increase in its gold reserves at its Wiluna underground operation, with the project now estimated to host an underground ore reserve of 4.33-million tonnes, grading 4.474 g/t gold for 661 000 oz of contained gold.

The company earlier this week also formalized an agreement with contractor Byrnecut Australia for the performance of underground development and production mining services at Wiluna, over the next five years.

Wiluna has started a three-year staged development plan which is aimed at treating all the ore types at the mine through four processes, including the existing carbon-in-leach plant, a flotation and concentrator, a gravity circuit and a tailings retreatment plant.