Capricorn Metals will raise $65 million to advance development of the Karlawinda gold project in the Pilbara region of Western Australia.
The equity raising will also allow Capricorn to satisfy a key condition and reopen talks to secure a debt and gold hedging facility with Macquarie Bank.
The $107 million debt and gold hedging facility from Macquarie Bank was expected to fund the majority of the Karlawinda construction costs, but earlier this year because a key signing day was missed.
Capricorn executive chairman Mark Clark said, “we are very pleased to have received commitments for this $65 million share placement as it will allow Capricorn to move towards development of the Karlawinda gold project with confidence that there is now a clear funding pathway for the project.”
The raising will be completed in two tranches. The first tranche will raise $20.1 million, while the second tranche will raise $44.9 million pending shareholder approval.
“It will allow the company to expedite the optimisation of development plans targeting commencement of construction in the March 2020 quarter and targeting first gold production around a year after that,” Clark said.
“We are also pleased to have received very strong support from high quality investors who have taken cornerstone shareholdings through this raising.”
Capricorn’s placement will involve 406.25 million shares at 16.0 cents per share. The proceeds of the raising, along with Capricorn’s existing cash balance of $15.45 million, will be mainly used to expedite development of the Karlawinda open pit project.
The cash resources will also be used to complete other pre-development and infrastructure activities, pre-production mining works, deposits for long lead capital items, construction of processing plants and other infrastructure, ongoing exploration, and satisfy working capital requirements.