Gold Road Resources has announced the second-largest capital raising by a Western Australian company for the year, which it will use to fund ongoing work at its Gruyere gold project near Laverton.
Gold Road Resources has announced the second-largest capital raising by a Western Australian company for the year, which it will use to fund ongoing work at its Gruyere gold project near Laverton.
Gold Road has received firm commitments for the placement of 98 million shares at 44 cents each to raise $43 million, and plans to undertake a one-for-10 non-renounceable entitlement offer to raise a further $31 million.
The price of the raising is a 4.3 per cent discount to the company’s last closing price, and a 10.7 per cent discount to its 10-day volume-weighted average price.
The raising has attracted three unnamed North American institutional investors, who have agreed to subscribe for a combined $20 million of the offer.
It follows revelations last week that Gold Road has been seeking a joint venture partner for Gruyere, with speculation that it may sell a minority 30-40 per cent stake in the $455 million project to offload some of its funding requirements to bring the gold operation into production.
Gold Road chairman Ian Murray said the decision to raise the capital reinforced the company’s commitment to its Gruyere, while highlighting significant investor interest in the project.
“This equity raising will enable Gold Road to de-risk and to de-bottleneck the Gruyere project, and to expedite its development, through the purchase of long lead time capital items and commencement of early works and front-end engineering and design (FEED), in parallel with the completion of the feasibility study,” Mr Murray said.
About $32 million of the proceeds of the raising will go towards purchasing long lead time capital items for Gruyere, while $18 million will be spent on completing FEED and early works.
Exploration at Gruyere and Gold Road’s Yamarna tenements will be allocated $10 million, while the remaining $14 million will go towards general working capital needs.
Macquarie Capital and Argonaut were joint lead managers to the raising.
Treadstone Resource Partners acted as strategic and financial adviser to Gold Road, while Corrs Chambers Westgarth acted as legal adviser.
For 2016, the raising is second in size only to Pilbara Minerals’ recently announced $100 million capital raising, with TFS Corporation’s $60.5 million raising the third largest so far.
Gold Road has already completed a pre-feasibility study on Gruyere, and already has funds allocated for the full cost of completing a feasibility study which is expected to wrap up by the end of the year.
Gold Road shares were unchanged at 46 cents each at 10am.