Red 5 raises cash, talks consolidation

Red 5 is chasing $60 million from institutional investors to cover ramp-up costs for its new King of the Hills operation as consolidation talks with fellow Leonora miner St Barbara continue.

The Mark Williams-led goldminer requested and entered a trading halt earlier this morning, flagging an announcement regarding an upcoming capital raise.

Red 5 later confirmed that it was looking to raise some $60 million from institutional investors via a two-tranche placement, with shares up for grabs at 16 cents per share, representing a 23 per cent discount on its 5-day volume weight average price.

At the same time, the company also divulged that it was in ongoing discussions with fellow Leonora miner St Barbara.

“Red 5 participates in strategic consolidation discussions from time to time,” a presentation from the company read.

“Red 5 is in ongoing discussions with St Barbara (SBM) regarding potential operational synergies.”

The company lauded the potential for ‘unrivalled synergies’ to process ore feed from each of their projects, which are located approximately 30 kilometres apart from each other.

Red 5 also pointed to the combined 4.9 million ounce resource combination of its King of the Hill asset and St Barbara’s Gwalia operation.  

Discussions take place against the backdrop of much speculation about consolidation in the prolific WA gold region.

Raleigh Finlayson-led Genesis Minerals signalled a kick-start of the process by acquiring Dacian Gold in an $111 million scrip deal earlier this year, which ticked over with shareholders last week.

Genesis has also been in going discussions with St Barbara.    

Speaking at the Diggers & Dealers forum in August, Mr Finlayson said that there was more of an openness and willingness with companies in the Leonora region for consolidation.

Canaccord Genuity and Petra Capital are joint lead managers and bookrunners to Red 5’s placement, with Ord Minnett acting as co-manager.

Proceeds from the raise are set to go towards supporting ramp-up at King of the Hills, which the company said had been delayed between May and July quarter due to COVID-absenteeism.

Prior to today’s trading halt, Red 5 shares last changed hands at 19 cents.