COPPER and gold miner Straits Resources has announced a $30 million equity raising to fund a production ramp up at its Mt Muro gold mine in the Indonesian province of Kalimantan.
Prior to the share placement, Straits had been anticipating a cash injection from the sale of its Hillgrove antimony-gold mine. However, Emu Nickel informed the ASX in early May that it had failed to raise the $60 million required to purchase Hillgrove and did not see that it would be able to do so in the foreseeable future.
To raise the $30 million, Straits is offering 48.4 million new fully-paid ordinary shares to sophisticated and professional investors at $0.62 per share.
The issue price is an 8.8 per cent discount on Straits’ closing price on May 8: the last trading day prior to the placement.
Straits has estimated it will cost $20 million to increase production to its 100,000oz of gold equivalent annual target by the end of the 2013 financial year.
This is substantially higher than the initial $10 million cost forecast in February this year. Remaining funds will be used to repay placement costs and fun ongoing working capital requirements.
Production from Mt Muro was anticipated at 45,000oz of gold equivalent for the June 2012 financial year, but it has been revised down to 40,000oz of gold equivalent due to higher than expected waste stripping at the Serujan deposit and the associated delay in accessing ore.
By Lorna Seatter