Gascoyne to raise $24.5m as liabilities pile up

Struggling gold miner Gascoyne Resources has announced a share placement and rights issue at a 50 per cent discount to its previous closing price, as it seeks to pay down some of its mounting debts.

Gascoyne is seeking to raise $3.86 million via a share placement at 5 cents per share, a 50 per cent discount to its last traded price of 10 cents.

It has also proposed to raise an additional $20.6 million via a four-for-five rights issue.

In a statement, the company said it had already received pre-commitments from investors for over $20 million, including from an existing large European shareholder, who had committed to $2 million of the placement and to sub-underwrite up to $8 million of the rights issue.

Gascoyne said it may also raise a further $3 million in a top-up placement.

Perth brokers Hartleys and Argonaut have been tapped as joint lead managers for the placement, and Gascoyne said the placement would cost $2.6 million.

From the funds raised, Gascoyne said it would spend $24.1 million, which includes existing cash reserves of $9.4 million, on working capital.

It said it would also use a portion of the funds raised to repay $7.2 million in debt owed to its mining contractor NRW Holdings.

Yesterday, Gascoyne said it pushed back repayments to its mining contractor, NRW Holdings, on a $12 million loan, by six months to mid-2020.

It also revealed yesterday there was significant doubt over its future after it lost $47 million in six months and wrote-down the value of Dalgaranga by $33.5 million.

Gascoyne posted a $47.2 million loss for the six months to the end of last year, and the company said the poor performance stemmed from several production issues at Dalgaranga.

These issues included poor blasting outcomes at the mine, and multiple equipment replacements and repairs at its mill.

The company posted liabilities of around $208.3 million, which exceeded its assets by approximately $30 million.

In a statement, independent auditor Grant Thornton said this indicated that a “material uncertainty exists that may cast significant doubt on the group’s ability to continue as a going concern”.