Australian gold explorer De Grey Mining has launched a fully underwritten placement to raise A$300m ($192m) at a price of $1.05(A$1.56) a share.
The company will issue a total of 285 million shares under the placement in two tranches.
Gold Road Resources, one of the shareholders of De Grey, has agreed to subscribe for more than 49 million shares under the first tranche.
Under the second tranche, it will buy enough shares to own a 19.9% stake in De Grey.
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The second tranche is subject to approval from the company’s shareholders.
Subject to their approval, proceeds from the placement will be used for finalising detailed engineering and to update its Hemi gold project in the Pilbara region in Western Australia.
It also plans to refine its contracting strategy, advance project tenders and expedite approval processes using the funds.
The proceeds will also help the company undertake early works ahead of the final investment decision, continue with exploration drilling across Greater Hemi and regional areas, and meet general working capital purposes.
According to De Grey, Hemi’s definitive feasibility study (DFS) outlines an average annual gold production of 553,000oz between years one and five, 530,000oz between years one and ten, with a peak production of 570,000oz in the second year.
De Grey managing director Glenn Jardine said: “Delivery of the Hemi DFS is a major milestone for the company and sets a solid foundation from which the company can proceed with confidence to the next stage of development of the Hemi Gold Project.
De Grey’s Board has endorsed the outcomes of the DFS and approved the commencement of preliminary project development activities. These activities include ordering critical path long-lead items, continuing detailed engineering and refining the project execution plan, advancing major tenders and finalising the contracting strategy.
“This will establish the platform for a Final Investment Decision and full project financing next year, ahead of the start of construction, targeted for the second half of 2024,” said Jardine. “This indicative timetable and the DFS construction schedule would result in first production from Hemi in the second half of 2026.”