De Grey Mining Ltd (ASX:DEG) has received commitments to raise about $3 million via a placement of shares to sophisticated, professional and other exempt investor clients of Bell Potter at a price of 5 cents per share.
The company has also entered into an underwriting agreement with Bell Potter, who has agreed to underwrite a pro-rata renounceable entitlement offer to raise about $19.1 million.
The entitlement shares will be offered to eligible shareholders on the basis of one new share for every 1.28 existing shares held as at July 23, 2019 (record rate) at an issue price of 5 cents per share.
Funds raised under the offer will be used to complete the acquisition of Indee Gold, thereby consolidating and securing 100% ownership of the Indee Gold landholding.
The remaining funds will be used to continue exploration activities across the project with an aim of increasing the resources to 3 million ounces.
De Grey executive chairman Simon Lill said: “The ability to attract a broker of the quality of Bell Potter to the capital raising is testimony to the quality of the tenement package that De Grey will own 100% following the acquisition of Indee Gold. We view Bell Potter’s interest in the company and the introduction of a new group of shareholders as transformational.
“The offer has been structured and priced by the Board to encourage all shareholders to support the raising, while ensuring completion of the required capital raising via the fully underwritten backing of Bell Potter. The De Grey board encourages all shareholders to support this offer.
“We also thank DGO Gold Limited for their ongoing support of the company through their commitment of up to $5.0M in this raising.”
Indee Gold acquisition
On February 9 2017, De Grey announced that it had entered into an option agreement to acquire Indee Gold for a total of $15 million (comprising cash and shares).
Over the 2 ½ years since that agreement, De Grey has explored and upgraded the resources such that the most recent resource announcement resulted in a 230% increase in gold resources on the Indee Gold tenements resulting in a final acquisition price of $13.14 per ounce.
The acquisition of Indee Gold also includes granted mining leases, existing heap leach stockpile, native title mining agreement, supporting infrastructure and significant exploration upside including the conglomerate gold targets.
The final settlement now comprised of a payment of $9.7 million in cash and the issue of $3 million worth of shares in De Grey.
Entitlement offer timetable