Gascoyne Resources is offering up new shares at nearly half price to cover costs following the closure of its flagship mine and to settle its dues with contractor-turned-creditor NRW Holdings.
Gascoyne Resources is offering up new shares at nearly half price to cover costs following the closure of its flagship mine and to settle its dues with contractor-turned-creditor NRW Holdings.
The West Perth-based company suspended mining at its Murchison flagship Dalgaranga in November last year after succumbing to ballooning costs and labour shortages, with the asset put under care and maintenance.
Two months later and Gascoyne has today announced a $50 million debt and equity funding package, including a $26 million capital raising.
The bulk of the funding is set to go towards a new mine plan for Gascoyne centred around the Never Never discovery.
Approximately $24.9 million will be spent on drilling and exploration at the discovery to eventually establish an open pit and underground operation, with a maiden reserve expected in the first half of 2024.
Gascoyne would use existing Dalgaranga infrastructure for processing.
“This multi-pronged $50 million funding package – which is underpinned by the highly respected global resources private equity fund Tembo Capital and our supportive major shareholder, Delphi – will put Gascoyne in a unique position in the Australian gold sector," Gascoyne managing director Simon lawson said.
“Having ownership of a fully operational gold processing plant at Dalgaranga along with the recent discovery of a +300koz high-grade gold deposit that is still open and growing and located in close proximity to the plant gives us the opportunity to create an exciting long-term operating and growth plan for the company."
New shares have been offered to institutional investors at 10 cents apiece under the Canaccord Genuity-led placement, marking a 49 per cent discount on Gascoyne's last close of 19.5 cents.
Some 263 million new Gascoyne shares will be available under the placement, which has been upsized by a standard ASX Listing Rule 7.1 “supersize” waiver granted by ASX, according to the company.
All of Gascoyne’s board directors are expected to sign up for $100,000 worth of stock each under the raising, with finance director David Coyne to shift from finance director to a non-executive board role amid cost-savings efforts.
Among those expecting payment is Western Australian contractor NRW Holdings, which had been delivering a six-year open pit mining and drill-and-blast contract valued at over $300 million with Gascoyne before it closed the operation.
Chief executive Jules Pemberton revealed at its AGM last year that NRW had insisted on weekly payments from the struggling goldminer.
Provided the raising goes as planned, NRW will receive $2 million in cash and $2 million in fully-paid Gascoyne shares as part of an agreed creditor settlement.
Private equity fund Tambo Capital has made a cornerstone $21.3 millon investment in Gascoyne.
The funding will be split across a $15 million secured loan, which will convert to shares and a $6.3 million loan to convert to a gold royalty.
In addition, Gascoyne's largest shareholder Delphi will lend the company $2.5 million.
Approximately $6 million of proceedings raised will go towards covering redundancy costs and creditor payments.
The company is targeting a restart decision for Dalgaranga in the second half of 2024.
