De Grey Mining is closing in on the next phase of an ambitious expansion with a $22 million capital raising to fund its acquisition of the Indee Gold mine in the Pilbara, Western Australia.
The acquisition would consolidate the company’s existing Turner River project with the adjacent Indee Gold site to form a single, 1.4 million ounce per annum project (the Pilbara gold project) 60 kilometres south of Port Hedland.
The news follows De Grey’s recent discovery of several exploration targets at the project earlier this month following a review of its exploration database.
A portion of the $22 million will be dedicated to further exploration opportunities in 2019 and 2020 as De Grey works to build its resource further.
The company also upgraded its total resource by 21 per cent to 29.65 million tonnes at an average grade of 1.8 grams of gold per tonne for 1.68 million ounces of contained gold based on drilling completed across all deposits up to the end of June.
De Grey first announced its interest in acquiring Indee Gold in February 2017 for $15 million, with an initial right to acquire the project within 18 months.
This date has been gradually extended over time, with an end date for the acquisition now set for August 24 at a final settlement cost of $9.7 million in cash and $3 million in De Grey shares.
The company will offer one new share for every 1.28 held shared at a price of five cents per share for the raising. De Grey has already received commitments for around $3 million (around 60 million shares) from investors, and investment firm Bell Potter has agreed to underwrite a pro-rata renounceable entitlement offer to raise about $19.1 million.
DGO Gold, which held around 5.9 per cent of De Grey’s shares prior to the announcement of the raising, stated that it would commit up to $5 million by subscribing for six million shares in the placement, in addition to committing to taking up its full entitlement for the new issue of 24 million shares.
“The ability to attract a broker of the quality of Bell Potter to the capital raising is testimony to the quality of the tenement package that De Grey will own 100 per cent following the acquisition of Indee Gold,” De Grey executive chairman Simon Lill said.
“We view Bell Potter’s interest in the company and the introduction of a new group of shareholders as transformational.”
DGO will also be able to nominate two directors to the board of De Grey following completion of the placement.
Eduard Eshuys, DGO executive chairman, said De Grey’s drilling results from its land position in the Pilbara had “exceeded DGO’s expectations”, with De Grey’s resource growing from 1.2 million ounces to 1.7 million ounces since it first invested in the company last year.