15/01/2020 - 14:50

Kalamazoo shares soar on $8m deal

15/01/2020 - 14:50

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Junior gold miner Kalamazoo Resources has announced an $8 million placement to billionaire investor Eric Sprott and his Canada-listed company, Novo Resources Corporation.

Kalamazoo shares soar on $8m deal
The investment comes after drilling at Kalamazoo's Castlemaine site revealed a high-grade gold intersection. Photo: Kalamazoo

Junior gold miner Kalamazoo Resources has announced an $8 million placement to billionaire investor Eric Sprott and his Canada-listed company, Novo Resources Corporation.

Mr Sprott and Novo Resources will both subscribe to 10 million Kalamazoo shares at 40 cents per share, each with an attaching option exercisable at 80 cents within 18 months.

Taylor Collison is acting as lead manager to the placement.

Kalamazoo said it would use the funds raised to expand its exploration and drilling programs at the Castlemaine, South Muckleford and Tarnagulla Central gold projects in Victoria.

The company will have a cash balance of $9 million following the placement along with $4 million of receivables over the next 12 months from the recent sale of its Snake Well gold project in Western Australia.

Its shares surged 65.22 per cent today to trade at 57 cents per share, at 4pm AEDT.

Kalamazoo chairman and chief executive Luke Reinehr said the investment came after drilling at the Castlemaine site revealed a high-grade intersection of 1.42 metres at 261.3 grams per tonne of gold from 100.32 metres.

“The high-grade intersection supports our exploration strategy to focus on the incredibly rich historical Castlemaine and South Muckleford goldfields in our search for the next major gold deposit in Central Victoria,” he said.

Eric Sprott’s participation in the placement is also a wonderful validation and endorsement of the Bendigo Zone and its potential to host the next major gold discovery in Victoria.”

Mr Reinehr said the company looked forward to receiving commercial support as it advanced its exploration programs with further geophysical and geochemical surveys and drilling programs.

At the same time, Novo economic geologist Quinton Hennigh was appointed to Kalamazoo’s technical advisory committee.

Dr Hennigh has previously worked with gold mining companies Homestake Mining, Newcrest Mining and Newmont Mining Corporation.

He has chaired the Novo Resources board since 2010.

Dr Hennigh said Kalamazoo’s discovery in the Victorian goldfields was similar to Kirkland Lake’s high-grade underground mine at Fosterville, situated 45 kilometres north-east of the Castlemaine project.

“Kalamazoo’s recent drilling results display many of the right geologic indicators of this special type of high-grade deposit, remarkable given these recent results are at such an early stage,” he said.

Mr Sprott echoed these statements, saying the Victorian goldfields appeared ripe for more high-grade discoveries.

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