Tanami shares down on $12m raising

Shares in West Perth-based Tanami Gold NL have dropped 25 per cent on news the company plans to raise nearly $12 million through an entitlements issue to repay loans for ongoing development of its gold mine.

The company said today it will issue two new shares at a discounted 0.5c each for every one share held by stockholders on September 30, in a bid to raise some $11.8 million.

Money raised will be used to repay loans used to fund the underground development at its Coyote gold project in the Kimberley.

News of the raising saw Tanami's shares drop 0.5c or 25 per cent to an intraday low of 1.5c before rallying slightly to last trade at 1.7c at 15:32 AEST.

The company's current share price is a far cry from its value earlier this year, where stocks were trading at above $1.30.

The downward trajectory of Tanami's share price comes as Australian miners do it tough in a climate of rising costs and falling commodity prices.

The raising is being underwritten by major shareholder Allied Properties Resources Ltd.

Meanwhile Graeme Sloan has today been appointed the managing director and chief executive of Tanami.