Phoenix Gold plans $18m raising

Phoenix Gold has announced plans to raise up to $18.2 million through a share placement and entitlement offer to fund staged development at its Castle Hill mine near Kalgoorlie.

Phoenix aims to raise $7.8 million via a placement of about 60 million shares to institutional investors and a further $10.4 million through a one-for-three non-renounceable entitlement offer.

The issue price for both the placement and entitlement offer will be 13 cents per share, which represents a 12 per cent discount to Phoenix's 10-day volume weighted average price.

RBC Capital Markets and Lonsec are acting as joint bookrunners to the offer while Patersons Securities is acting as co-manager.

The combined proceeds of the capital raising will be used to fund staged development at Castle Hill, as well as lateral and depth extensions at its Broads Dam projects and working capital.

Phoenix last month announced plans to begin production at Castle Hill using third-party milling capacity rather than building a stand-alone project. 

The company envisages that mining will commence in the second half of this year, with 600,000 to 800,000 tonnes of ore delivered for haulage and treatment.

Base case gold production is estimated at 40,000 to 50,000 ounces in the 2014-15 financial year.

The staged development involves up-front capital spending of between $8 million and $10 million.