Ausgold raises $38m to advance development of Katanning gold project

Ausgold (ASX: AUC) has received firm commitments to raise $38 million for the development of its flagship Katanning gold project in Western Australia.

The company will issue up to just under 1.3 billion new shares at $0.03 each, representing a 14.3% discount to the last closing price of $0.035 on 31 May and a 7.68% discount to the 20-day volume-weighted average price.

Funds raised will be used for ongoing work programs at Katanning through to a final investment decision.

This will include the completion of a definitive feasibility study (DFS), the settlement of freehold land acquisitions, the continuation of regional exploration and the provision of working capital to fund the redemption of unsecured loan notes issued by the company.

Investor support

The raising received strong demand from Ausgold’s larger institutional investors from the UK, Europe and North America.

It was also heavily supported by key existing shareholders including Canadian firm Dundee Corporation, which subscribed for $3m to gain 10.9% equity and Jupiter Asset Management, which subscribed for $7m to increase its shareholding from 9.5% to 12.7%.

Dundee’s contribution is subject to approval from the Foreign Investment Review Board, as it would increase its interest in Ausgold beyond 10%.

Newly-appointed executive chair John Dorward will also subscribe for $1m worth of shares under the placement.

Project de-risking

Managing director Matthew Greentree said the “landmark” capital raising would underpin the completion of key work programs at Katanning, which has a 3.04 million-ounce resource.

“This raising will position Ausgold for a pivotal phase of growth,” he said.

“We are now completing the final elements of the DFS which will be delivered later this year [and working on] the acquisition of key farming properties that cover the main orebody and infrastructure areas.”

“Further project de-risking will include a program of grade control drilling and the placement of orders for long-lead items for the project’s development.”

He added that exploration along the project’s 17km mine trend and 13 drill-ready regional targets would aim to deliver the project’s “multi-million-ounce potential.”