West Perth-based Tanami Gold NL will raise $33 million through a placement to fund work on its Coyote Gold Project, including an accommodation village and new drill programs.
West Perth-based Tanami Gold NL will raise $33 million through a placement to fund work on its Coyote Gold Project, including an accommodation village and new drill programs.
The company raised $20 million earlier in the year, ensuring the company was free from debt and gold hedging.
The full text of a company announcement is pasted below
The Directors of Tanami Gold NL ("Tanami" or "the Company") are pleased to announce that the Company has arranged the placement of up to 330 million shares at an issue price of A$0.10 per share to raise up to A$33 million.
The strongly bid share placement will be made to international and domestic institutional and sophisticated investors.
Tanami will allot the placement in two tranches. The allotment of up to 125.4 million tranche 1 shares, which falls within the Company's 15% placement capacity pursuant to Listing Rule 7.1, will be issued on or around 16 November 2007. The allotment of up to 204.6 million tranche 2 shares will be issued subject to shareholder approval at a general meeting of shareholders scheduled to take place on 10 December 2007.
The funds raised will enable the Company to fully fund development of the Coyote Gold Project aimed at ramping up production to a minimum 50,000 ounces of gold per annum by June 2008, 70,000 ounces per annum by June 2009 and further production increases being targeted through fully funded intensive exploration programs and potential tenement and resource acquisitions within the Tanami Province.
To enhance Company growth and to accelerate development of the Coyote Gold Project while remaining debt and gold hedge free, the funds raised will be applied to:
- Build a modern 144 man accommodation village closer to the treatment plant and airstrip which will provide for more cost effective and efficient manpower usage and assist in retaining high quality employees and contractors in the highly competitive Australian labour market for experienced mining personnel;
- Purchase the underground mining fleet and ancillary equipment;
- Accelerate development of the underground portal and decline aimed at increasing production from the high grade (+13g/t Au) underground lodes and gaining earlier access to extensions of existing lodes and potential new lodes;
- Diamond drill programs from both surface and underground designed to convert existing resources to reserves and to test for extensions to existing lodes and exploration for new deposits;
- Intensive regional exploration programs aimed at delineating new resources/reserves within trucking distance of the Coyote treatment plant and for new stand alone discoveries;
- Potential complementary tenement and resource acquisitions; and
- Working capital.
The pricing of the issue was based on a small discount (approximately 5%) to the volume weighted average price of the Company's ordinary shares for the 10 days trading prior to arranging the placement.
The Directors consider the placement is prudent and important to strongly position the Company to grow through accelerated development of the Coyote Gold Project, exploration success and acquisitions, without the financial risk associated with debt and gold hedging at a time of rising gold prices and further gold price increases forecast by many market participants.
Following completion of the placement, the Company will be fully funded to develop the Coyote Gold Project, will remain debt free and highly leveraged to the rising gold price with no gold hedging in place.
