11/10/2007 - 12:12

EnviroGold to raise $16m for Dominican tailings project

11/10/2007 - 12:12

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West Perth-based mineral explorer EnviroGold Ltd has announced plans to raise $16 million through a placement to develop its 70 per cent owned Las Lagunas Gold Tailings Project in the Dominican Republic.

EnviroGold to raise $16m for Dominican tailings project

West Perth-based mineral explorer EnviroGold Ltd has announced plans to raise $16 million through a placement to develop its 70 per cent owned Las Lagunas Gold Tailings Project in the Dominican Republic.

The company will raise the money through the placement of 100 million shares at 16 cents each, with one free attaching option for every two shares issued.

Indian Ocean Capital has been appointed lead manager to the Offer.

 

 

The full text of a company announcement is pasted below

Emerging Australian resources development company EnviroGold Limited (ASX: EVG) ("the Company", "EnviroGold") advises that the Company plans to raise A$16 million to develop its 70% owned Las Lagunas Gold Tailings Project in the Dominican Republic.

The raising will be a through a share placement of 100 million shares at 16 cents and has been approved by shareholders. A Prospectus in respect of the Offer has been lodged with ASIC.

Indian Ocean Capital has been appointed lead manager to the Offer.

The shares will have one free attaching option for every two shares issued. The options will be listed and are exercisable at 25 cents each on or before 31 December 2009.

The Offer is scheduled to close on November and it is anticipated the new share will commence trading on the ASX on November 20.

EnviroGold executive chairman Mr Brian Johnson said the Company had been buoyed by the market's response to EnviroGold's business model of retreating refractory ores and tailings, and the potential of its current projects and growth strategy.

"This capital raising will allow us to move ahead with our development timeline for the Las Lagunas project, where we plan to commence construction in the fourth quarter this year and commission the project before the end of 2008," Mr Johnson said.

EnviroGold is required to fund US$18 million of the project capital costs. The Company has already contributed US$5.5 million and will provide a further US$12.5 million (A$15.15million) from the placement. This represents the total placement funds, after expenses.

All environmental and construction permits necessary for the development of the project have been received and engineering and procurement is well advanced.

EnviroGold is also in the final stages of negotiating a US$22.0 million facility with its bank for the project finance for the Las Lagunas project, and the bank's independent consultants have reported favourably on both the technical and financial aspects of the project.

At a gold price of US$650 per ounce, silver price of US$12.70 per ounce, and an
assumed exchange rate of US$0.80 to A$1.00 over the 6.5 year planned project life of Las Lagunas, EnviroGold's expected average after tax profit from the project is A$9.8 million per year.

At current gold prices, profitability would increase by an estimated further 50%.

Feasibility work will now accelerate on the Company's Trujillo gold project in Peru (50% joint venture) which could result in double the projected annual profit, to around $20 million per year in 2010. EnviroGold anticipates its share of the equity required (US$6.0 million) should be able to be funded from cash flow from Las Lagunas.

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