Macmahon backs $38m Calidus capital raising

Mining services contractor Macmahon Holdings will invest more than $10 million in Calidus Resources' plan to raise $38.5 million to expand its gold project in the Pilbara. 

The gold explorer and producer announced it had struck a deal with Macmahon to secure a $10.5 million investment towards expanding its Warrawoona gold project. 

In today’s announcement on the ASX, Calidus said it had entered into a binding term sheet with Macmahon for the contractor to convert $10.5 million worth of debt into equity in Calidus. 

The debt will come from Calidus’s $210 million mining services contract awarded to Macmahon for its services at the Warrawoona gold project in September 2021.  

The deal would make Macmahon a substantial shareholder in Calidus, subject to shareholder approval.

ASX-listed Calidus also received commitments from investors to raise $23 million through a placement of shares priced at 21 cents apiece. 

The share issue price represents a 20.8 per cent discount on Calidus’s last closing price of 26.5 cents on April 18. 

The David Reeves-led company’s largest shareholder, Alkane Resources, has subscribed for $2.5 million worth of placement shares, according to Calidus. 

In addition to the placement, the West Perth-based company will undertake a share purchase plan to raise $5 million. 

Canaccord Genuity and Euroz Hartleys are acting as joint lead managers to the placement and Blue Ocean Equities are acting as co-manager. 

Macmahon chief executive Michael Finnegan said the company had strengthened its relationship with Calidus. 

“We are confident that by our participation in the Calidus capital raise, and with a deep understanding of the operation, we will be able to contribute to the successful growth of their business as the surface mining contractor at Warrawoona,” he said. 

“We value the relationship we have forged with Calidus, which we are seeking to expand and welcome the opportunity to share in the company’s emerging growth prospects.” 

Calidus has been engaged with Macmahon since 2020 when it appointed the company as its preferred early-stage civil works and mining contractor for its Warrawoona project. 

The Warrawoona gold project in the east Pilbara reached first production in May 2022. 

The $38.5 million worth of funds raised will be used to back Calidus’s plan to ramp up production of the 1.66 million ounces operation by about 130,000 ounces per annum. 

The funds raised will also be used to maintain “a conservative balance sheet and generate strong cash flow”, according to Calidus.

On the ASX, Calidus shares were down 15.09 per cent to trade at 22 cents at 1.56PM AEST. 

Macmahon shares were also down 3.23 per cent to 15 cents.