AuStar Gold Ltd (ASX:AUL) has arranged a placement of $5.5 million to fund development and further exploration at its Morning Star and Rose of Denmark gold mines in Victoria.
Binding commitments have been received for around 1.22 million shares at 45 cents per share.
The company is also providing an opportunity for existing shareholders to participate through a share purchase plan, on identical terms to the placement.
This will raise an additional $1 million, with the ability to accept oversubscriptions for a further $1 million.
‘Transformational capital raising’
AuStar chief executive officer Tom de Vries said this was a transformational capital raising for the company.
He said: “[This] will enable AuStar Gold to accelerate its immediate trial mining activities, intended to both prove concept as well as deliver economic gold production outcomes to the company.
“With trial mining underway at Rose of Denmark and excellent drilling and face sampling results continuing to be delivered at Morning Star, I am confident grade reconciliation work over the next several weeks, in line with continuing production, will demonstrate the effectiveness of AuStar’s development strategy.
‘Region with huge exploration upside’
Net proceeds from the capital raising will be used for:
An accelerated resource exploration and definition program at the company’s Victorian gold mines;
Accelerated trial mining and production activity at the mines;
A regional exploration program across AuStar’s tenement package, comprising the bulk of the Walhalla/Wood Points gold trend; and
General corporate and working capital purposes, including future growth initiatives.
AuStar chairman Frank Terranova said he was very pleased with the level of investor interest shown in the company.
Terranova said: “The company is now totally focused on delivering, for shareholders, on the exceptional potential apparent in its position as a well-funded, production-ready gold operation in a region with huge exploration upside.”
AuStar is focused on returning to production the historic Morning Star mine, an advanced high-grade gold project with significant infrastructure including processing plant and strategic tenement footprint.
The company also intends to develop its adjoining tenements in the Walhalla to Jamieson gold district into low-cost, high-grade gold production projects.