Dacian Gold plans to raise $150 million to help fund development of its 100 per cent-owned Mt Morgans gold project in Western Australia.
According to the Perth-based company, the raising will involve a $50 million institutional placement and a $100 million entitlement offer. About 54 million shares will be issued by the company at $2.75 per share, which represents a 7.4 per cent discount on its latest trading value.
The proposed raising follows last week’s release of the Mt Morgans project feasibility study, which delivered initial ore reserves of 18.6 million tonnes at two grams per tonne for 1.2 million ounces.
Capital costs to build the project are an estimated $220 million, which includes $172 million of infrastructure and $48 million of mine establishment costs for the underground Westralia mine area and the Jupiter open pit. Production is expected to commence during first quarter 2018.
The company intends to use the funds raised for construction and development expenditure, including for a new 2.5 million tonne per annum treatment facility; exploration; and corporate expenditure, working capital and contingency costs.
Dacian executive chairman Rohan Williams said the raising would take the company a step closer to achieving its goal of becoming Australia’s next significant mid-tier gold producer.
“The raising will pave the way for us to proceed quickly with project construction and mine development at Westralia and Jupiter, keeping us firmly on track to achieve our timetable of delivering first production and cash-flow in first quarter 2018,” Williams said.
“It will also fund exploration campaigns aimed at making more discoveries on our extensive and highly prospective land-holding at Mt Morgans, where we believe the opportunity to continue to grow our gold inventory is exceptional.”
Williams added that debt discussions to cover the balance of the project costs were well advanced.