Shares in South Perth-based Noble Mineral Resources have surged more than 37 per cent on news Chinese group Zhongrun is to invest $87.7 million and take a 42 per cent stake in the company.
The privately-owned group has investments in real estate and has recently ventured into resources through backing a number of companies listed on both the London and Toronto stock exchanges.
Noble said it was approached by Zhongrun when it announced intentions to raise capital in July. Managing director Wayne Norris said it was the most attractive offer from a number received from interested parties which also included ASX-listed companies.
"The cash injection deals comprehensively with our funding needs and says to us that Zhongrun shares our confidence in Bibiani, the strength of our current team, and our potential beyond the Bibiani project," Mr Morris said.
The investment is to be funnelled into progressing Noble’s flagship Bibiani gold project in Western Ghana, which has an estimated resource of 2.5 million ounces, as well as paying off debts.
The company has produced 5,500 oz of gold from the project so far while it works to get its processing plant fully up and running.
The investment would allow the company to ramp up the current production from the plant to reach targeted production of more than 150,000 ounces per annum.
Zhongrun’s funding will be provided in two tranches; the first involving investment of $16.3 million through subscription of 101.8 million shares priced at 16 cents a share.
The second tranche will see investment of $68.4million through Zhongrun purchasing 380 million shares at 18 cents each.
Completion of both tranches will result in Zhongrun owning 41.5 per cent of Noble shares. Noble has also agreed to appoint a third Zhongrun nominee to its board.
The deal also allows for further investment of $55.4 million with Zhongrun being offered options over an additional 240.9 million shares priced at 23 cents each over a three year time period.
If it takes up the offer Zhongrun will ultimately hold 51.6 per cent of Noble’s issued shares.
The investment follows a capital raising Noble launched earlier this month to raise $11 million. At the time it said a further $8 million would be required to further progress on the Bibiani project.
Noble shares were worth 12 cents each when it went into a trading halt in early August. At close of trade today, the value had increased by 37.5 per cent to 16.5 cents.
However, the value is still well below what the company’s shares were worth a year ago when they were sitting comfortably around 60 cents apiece.
