De Grey Mining (ASX:DEG) have announced a successful two tranche placement of approximately 285.7 million shares at a price of $1.05 per share to raise $300 million before costs.
The Placement bookbuild saw strong demand from leading global investor groups both domestically and offshore, providing endorsement of the outcomes of the Definitive Feasibility Study (DFS) for the Hemi Gold Project and the Company’s growth plan.
The shares offered for the Placement were at a discounted rate of 5.8% to the last closing share price, and a 12.0% discount to the 5-day VWAP of $1.193.
The Placement was fully underwritten and will take place in two tranches:
- Tranche 1 to raise approximately $246.0 million via the issue of 234,269,778 New Shares utilising the Company’s placement capacity
- Tranche 2 to raise approximately $54.0 million via the issue of 51,444,508 New Shares, subject to shareholder approval to be sought at a meeting of the Company expected to be held in November
Key Placement Contributors
One of De Grey’s major shareholders, Gold Road (ASX:GOR) played a pivotal role in the firm commitments received for the placement, committing to 49,438,097 New Shares under Tranche 1 of the Placement, and a total of 59,675,554 New Shares after the completion of the second tranche, to increase its shareholding in the Company to 19.9 percent.
In addition to the Placement, four Directors at De Grey have subscribed for New Shares at the Placement price of $1.05 per share.
- Non-Executive Chairman Simon Lill – 47,620 New Shares
- Lead Independent Non-Executive Chairman Peter Hood – 95,240 New Shares
- Independent Non-Executive Director Emma Scotney – 333,335 New Shares
- Independent Non-Executive Director Paul Harvey- 142,860 New Shares
The additional $0.6 million funds raised would be put towards general working capital purposes, however it is subject to shareholder approval.
Proceeds of the Placement
De Grey Mining has outlined that the proceeds from the successful raise will be used to advance its explorations efforts at its Hemi Gold Project, continuing exploration drilling and the Project and greater Hemi and regional areas, finalise detailed engineering, updating the execution plan, refine the contracting strategy, advance major project tenders and progress the approvals processes.
Figure 1: Map of the Hemi Gold Project
The funds will also be used to order long-lead major equipment items ahead of planned construction activities and fund early works where approvals allow.
The Placement is significant for the Company as it provides a notable balance sheet strength and flexibility to progress activities to support the Project execution schedule.
Ultimately the firm commitments received have allowed De Grey to maintain its exploration momentum at the Hemi Gold Project, whilst advancing toward production and de-risking future development.
Figure 2: De Grey Mining Hemi Project sampling
De Grey is committed to continuously growing one of Australia’s gold resources with its new discoveries at the 1,500 square kilometre Hemi Gold Project.
In 2019, the Company made a large scale discovery at the Project, bolstering its Mineral Resource Estimate to 9.5Moz with the potential to be mined by large scale, low strip ratio, low cost open pit mining.
The Project currently comprises six main zones including the Aquila, Brolga, Crow, Diucon, Eagle and Falcon, with mineralisation confirmed over an area of +2,000 metres north-south, +3,500 metres east-west and to depths of up to 500 metres in some areas.
The Company’s recent $300 million placement positions it to expedite progress, aiming for the Project financing process to conclude by mid-2024, well in advance of the Final Investment Decision.
DEG’s Australian Stock Exchange-listed share price is currently trading at $1.065 (12.15pm UTC+ 8 hours).