PERTH (miningweekly.com) – Gold hopeful De Grey Mining will raise A$125-million in a fully underwritten share placement to fund exploration work and to complete a prefeasibility study on its Mallina gold project, in Western Australia.
The ASX-listed company on Wednesday announced that it would place 113.6-million shares at a price of A$1.10 each under its existing placement capacity.
The offer price represented a 9% discount to De Grey’s last closing price on October 19, and an 8% discount to the company’s 11-day volume weighted average share price.
The placement is fully underwritten by Canaccord Genuity and Argonaut PCF.
“De Grey is pleased to announce the launch of a fully underwritten placement, which displays a high level of investor support for our growth strategy at the globally significant Mallina gold project,” said De Grey MD Glenn Jardine.
“The placement provides De Grey with a significant capital runway to undertake exploration activities to expand the existing resource and progress project development studies. De Grey will now have a significantly strengthened balance sheet which provides a strong platform to unlock further value at Mallina.”
A recently completed scoping study at Mallina estimated that yearly gold production would reach some 473 000 oz/y for the first five years of operations, and some 427 000 t/y over the ten-year mine life.
Average all-in sustaining costs have been estimated at A$1 111/oz in the first five years, to some A$1 224/oz over the current ten-year evaluation period, placing Mallina in the lowest quartile of Australian gold producers.
The ten-million-tonne-a-year plant is expected to require a capital investment of some A$835-million, with the scoping study estimating a pre-tax net present value of A$2.8-billion and an internal rate of return of about 60%.