Perth-based gold exploration junior Alloy Resources plans to raise $5 million and list on the Australian Stock Exchange next month to pursue its exploration activities in the state’s Goldfields.
Perth-based gold exploration junior Alloy Resources plans to raise $5 million and list on the Australian Stock Exchange next month to pursue its exploration activities in the state’s Goldfields.
The float is to be underwritten by KTM Capital.
Alloy plans to spend $2.7 million on exploration and pre-development capital expenditure, and another $1.7 million will be set aside for working capital and operating costs.
While the company is seeking $5 million, it also reserves the right to accept subscriptions for a further 10 million shares by way of over subscription – bringing total capital raised to $7 million.
The main focus for Alloy is its Comets Webb project south of Meekatharra.
The company also has projects at Horse Well north of Wiluna and Doyles Dam near Kalgoorlie.
In addition, it also has a blue sky project, 88 Creek, in the Kimberley region where resources are yet to be uncovered but surveys and samples have provided good initial indications.
The float comes at a time of renewed interest in gold, as the gold price and shares in companies in the sector have enjoyed sustained upward movement in recent times.
Analysts say that in the latter part of last year the Australian price of gold began to rise above the tight $520 - $570 per ounce band it had occupied for much of the preceding four to five years
Hartleys resources analyst Andrew Rowell said that the Australian gold price had tracked the United States gold price until around February 2003 when it plateaued due to changes in the Australian/US exchange rate.
“The improving Australian dollar exchange rate has now had a positive impact on the gold price and this has had a flow through effect for companies in the sector,” he said.
“In addition gold has benefited from the current renewed confidence in resources in general.”
Gold explorers, in particular, have benefited, with prices for some growing more than 80 per cent in recent times.
“Explorers have been much more lucrative and volatile than producers, especially those who are close to production,” Mr Rowell explained.
He also expressed a measure of caution for the future outlook, citing cost blow-outs stemming from a well documented skills shortage and a reversal in exchange rate movements as potential barriers to further growth in the sector.
Alloy lodged a prospectus with the Australian Securities and Investment Commission last week for the issue of 25 million shares at 20 cents.
The offer will open on February 21 and is expected to close on March 22, with a March 29 list date planned.
Alloy managing director Jayson Meyers said the company’s capital raising would be put to use on three main fronts.
“We will pursue exploration to increase resources at Comets Webb and then look to convert resources to reserves. The second phase will be a mining feasibility study on the Comets Webb underground and open cut sites,” he told WA Business News.
“The third stage will include geophysical surveys and targeted drilling programmes.”
He said the company was looking to commence production before the end of the year.