Crescent to raise $45m

Crescent Gold has announced plans for a $45 million capital raising pitched at 11 cents per share, to bring a second gold mine into production and strengthen its balance sheet.

The pricing of the 2-for-3 non-renounceable rights issue compares with Crescent's last closing price of 15.5 cents.

Crescent also disclosed today that persistent rain had adversely affected ore processing through Barrick's Granny Smith processing facility.

It has also renegotiated default and covenant conditions of its $15 million facility with its financier, Indago Resources.

In return for postponing all conditions subsequent (which were proving difficult to achieve) until the date for repayment of the facility and properly establishing the loan in good standing, Crescent has granted Indago an increase in the existing royalty-like payments of 1.75% to a royalty of 2% and extended the term of the royalty to the life of the tenements.

Part of the rights issue proceeds ($5 million) will be used to repay the Indago facility.

Most of the proceeds will be used to bring the Summit underground gold mine, previously known as Lancefield and located within the Laverton area, back into production.

Initial studies suggest the project could produce between 50,000 and 70,000 ounces per annum, the company said.

Additionally, the proceeds will allow the company to undertake a partial reduction of its debt, placing it in a better position to negotiate a more attractive working capital facility.

Crescent proposes to issue approximately 414 million ordinary shares under the rights issue. This will take the total number of Crescent Gold ordinary shares on issue to 1.03 billion and capitalise the Company at $160 million based on its last closing price of 15.5 cents.

"The rejuvenation of Summit represents a significant high grade underground gold mining opportunity for Crescent," the company's Interim Managing Director, Mr Mark Tory, said today.

"A previously operating mine in the 1980s, Summit produced in excess of 1.0 million ounces but closed in 1994 when the gold price was approximately US$380 per ounce," Mr Tory said.