30/03/2020 - 13:41

Red 5 to raise $125m

30/03/2020 - 13:41

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Goldminer Red 5 is raising $125 million from a two-tranche share placement to fund the final feasibility study for its King of the Hills gold mine in Western Australia.

Red 5 to raise $125m
A final feasibility study for the King of the Hills project is due in September. Photo: Red 5

Goldminer Red 5 is raising $125 million from a two-tranche share placement to fund the final feasibility study for its King of the Hills gold mine in Western Australia.

Red 5, which began mining at KOTH in January 2018, said it had identified the potential to pursue a bulk-mining operation.

The West Perth-based company said the placement would de-risk funding requirements to develop the proposed bulk open-pit and underground mining and processing operation for KOTH.

The final feasibility study for the 4.7 million ounce gold project is due in September.

Under the first tranche of the placement, expected to settle on April 3, Red 5 will issue 171.5 million shares at 18 cents per share to raise around $30.9 million.

The company will issue a further 522.94 million shares under the second tranche, expected to occur in May, to raise around $94 million.

The Red 5 board is intending to contribute $470,000 to the second tranche.

Petra Capital will act as lead manager and bookrunner to the placement, and Canaccord Genuity will act as broker.

Red 5 managing director Mark Williams said the company was seeking to evolve into a multi-asset, mid-tier gold producer over the next two years.

“The capital raising significantly de-risks our funding requirements at King of the Hills, which is now well established as one of Australia’s premier emerging gold projects,” he said.

Red 5 bought KOTH from Saracen Mineral Holdings in 2017 for an initial $7 million in cash and 90 million Red 5 shares, issued at 5 cents per share.

Saracen had also received a deferred cash payment of $4.5 million.

It acquired a further 40.6 million Red 5 shares at 5 cents per share for around $2 million during a Red 5 rights issue in August 2017.

The deal took Saracen’s shareholding in the company to 10.5 per cent (130.6 million shares).

Saracen sold its entire shareholding of Red 5 in January this year for $39 million under a book build process at 30 cents per share.

Shares in Red 5 closed down 17 per cent today to trade at 20 cents per share.

Also today, Saturn Metals announced it would be raising nearly $3 million from a share placement.

The West Perth-based company said it would use proceeds, together with existing cash of $1.5 million, to fund drilling activities intended to upgrade Apollo Hill's inferred mineral resource of 24.5mt gold.

Saturn will issue approximately 11 million shares at 27 cents per share, with Canaccord Genuity acting as lead manager to the placement.

Saturn Metals said it now has around $4.5 million to progress the Apollo Hill project.

The company remains in a trading halt, requested on March 26.

STANDING BY BUSINESS. TRUSTED BY BUSINESS.

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