Gold explorers cash-in on investor interest and high prices
High gold prices has spurred a swathe of gold juniors to top up their cash balances.
As gold continues trading at all-time highs, ASX-listed explorers and miners are using this opportune time to boost their coffers through various equity raisings – with numerous stocks announcing a raising this month alone.
Many analysts and miners alike have been calling a bull market for the precious metal after its price exceeded A$2,000 per ounce in June this year for the first time.
This increase has continued with gold trading around A$2,222/oz on Monday.
Economist Jim Rickards has even proclaimed the bull run could see gold hit A$10,000/oz or US$10,000/oz within the next decade.
The all-time high Australian dollar gold price has resulted in numerous gold explorers and miners taking advantage of strong investor interest to top up their cash reserves.
Gold rallying in 2019
Commenting on the upsurge in gold stock capital raisings, investment company Lion Selection Group (ASX: LSX) executive director Hedley Widdup said the “equities market loves to take its lead from commodities”.
“And we’ve seen a strong lead from gold,” he told Small Caps.
“I think the primary driver is the level and outlook for interest rates, although the various examples of global uncertainty add to the attraction of gold for many buyers.”
Mr Widdup pointed out that gold producers had benefitted from the precious metal’s rising price and that these stocks tend to trade in line with the commodity’s performance.
Gold prices have rallied over the past 12 months.
With gold up more than US$300/oz (A$600/oz) in the last 12 months, gold exploration and development hopefuls have also begun to attract investor interest.
“Gold developers, in particular, have performed well in the last three-to-four months,” Mr Widdup explained, adding that the best performers were companies close to production.
“The lift in the gold price has enhanced the prospects for these companies more than for any others – there will be a price at which their project NPV (net present value) moves notionally into ‘easily fundable’ territory, and if these companies are permitted with a completed study in hand then they are probably on the spot for that sort of attention.”
Not everyone can join the party
However, Mr Widdup noted that funding gates haven’t been completely opened and companies angling to raise capital development proceeds still needed to have permits in place and studies completed.
In the exploration space, Mr Widdup said although funding amounts were smaller, the amount of equity raisings had increased.
“The tick up in these [raisings] taking place reflects the general increase in investor interest towards gold – the ultimate leverage, if you like, for someone wanting to put it all on black.”
Mr Widdup added explorers with gold discoveries have also been looked upon favourably by the market.
More support is coming
Speaking with Small Caps Shaw and Partners (formerly DJ Carmichael) WA state manager Davide Bosio said the interest in small gold miners and explorers won’t just be from institutional, sophisticated and retail investors, but will come from the major global gold plays themselves.
Mr Bosio pointed out that large producers are sitting on a “tonne of cash” with the gold price at all-time highs.
He added that with prevailing low interest rates, the producers are able access debt at much cheaper levels than before.
With a shortage of money spent on gold exploration in recent years, gold producers will be eyeing up explorers – particularly those with proven resources and reserves.
Mr Bosio said he anticipated the major miners will be making “bold steps” with their acquisition strategies drawing on large profits and cheap debt at their disposal.
Similar to Mr Widdup, Mr Bosio noted he has seen increasing everyday investor interest in gold explorers, with many juniors using the positive sentiment to “top up their bank accounts”.
Driving the interest in gold is ongoing global economic and geopolitical uncertainty caused by the US/China trade war, a looming Brexit deadline and a potential recession in the US.
With gold seen as a safe haven during uncertain times, investors have been flocking to the metal, which is compounded by a huge increase in central bank purchases globally.
“I am confident this gold environment will remain strong for some time,” Mr Bosio said.
He added, he felt the current activity may just be the start of a great shift in the precious metals market overall.
ASX-listed gold companies raising money
Over the last four weeks multiple ASX-listed gold explorers and miners in the small cap space have topped up their bank accounts.
These stocks include:
Kingston Resources (ASX: KSN)
One of the most recent gold stocks to cash-in on strong interest was Kingston Resources, which scooped up $3.1 million on Monday through a shortfall placement under the $4 million non-renounceable entitlement offer it announced in early May.
The company has also added $4.3 million to its cash piles through a concurrent placement with the $8.3 million in funds to be used to progress its Misima gold project in Papua New Guinea and Livingstone gold project in WA.
Marindi Metals (ASX: MZN)
Forrest Capital agreed to underwrite Marindi Metals’ (ASX: MZN) $2.2 million entitlement offer, which Marindi chairman says “represents a strong show of confidence” in the company’s board and management team and the company’s strategy to advance its Forrestania gold project.
By Monday, Marindi had raised $1.1 million and announced it was placing the shortfall with Forrest.
Marindi’s tenements span 1,000sq km in WA’s southern Forrestania Greenstone belt and host historical high-grade gold mines.
Beacon Minerals (ASX: BCN)
Beacon Minerals will have an extra $8 million to play with after announcing a placement to fund exploration at its wholly-owned Jaurdi gold project and recently acquire Stockdale licences.
Jaurdi has an initial five-year mine life and is undergoing commissioning with full production anticipated by the December quarter.
The Jaurdi pre-feasibility estimated surplus operating cashflow of $98.4 million at a gold price of A$1,650/oz – well below current prices.
Over the five-years, Beacon expects to process 2.5Mt at 1.9g/t gold to recover 126,000oz.
Orecorp (ASX: ORR)
Last week, Orecorp said on Friday it was raising $13.3 million via a placement to institutional and sophisticated investors.
The company said the placement will increase its cash position to $22 million and fund its sole ownership of the Nyanzaga gold project in Tanzania, which it hopes to develop into the country’s next large-scale gold mine.
Ora Banda Mining (ASX: OBM)
Another stock to raise money last Friday was Ora Banda Mining, which revealed it had received firm commitments for an $18.5 million placement to expedite the definitive feasibility study at its Daveyhurst project in Western Australia’s eastern goldfields.
Ora Banda hopes to deliver the study early next year and advance the project “quickly” into production.
The company’s tenements in the region span 1,336 square kilometres and host a global resource of 21 million tonnes at 2.6 grams per tonne fold for 1.8Moz of contained gold.
Amani Gold (ASX: ANL)
Notorious mining executive Klaus Eckhof’s latest venture Amani Gold will secure $2.5 million in funds via a placement to advance the Giro gold project in the Democratic Republic of Congo.
Giro has a global resource of 81.77Mt at 1.2g/t gold for 3.14Moz of the precious metal.
Additionally, Amani is undertaking due diligence on the Gada gold project, also in the DRC, and if it elects to proceed with the acquiring the asset, an initial 5,000m reverse circulation drilling program will start in September.
Yandal Resources (ASX: YRL)
Yandal Resources has completed its non-renounceable rights issue and shortfall giving it an extra $2.95 million and increasing its cash on hand to $5.9 million.
The company listed on the ASX in December last year and will use the funds to progress its gold exploration projects in WA including the Ironstone Well’s project’s Flushing Meadows prospect where drilling has recovered up to 7.25g/t gold.
Austral Gold (ASX: AGD)
Another recent gold stock to take advantage of strong interest was Austral Gold, which announced on Thursday morning it was raising up to $5.614 million via a non-renounceable pro-rate rights offer to eligible shareholders.
The company said it would use the funds to advance brownfield exploration programs at its projects, including the flagship Guanaco/Amancaya gold and silver asset in Chile, which produced 18,322oz of gold equivalent during the June quarter.
Golden Rim Resources (ASX: GMR)
Another gold play to announce a raising on Thursday morning was Golden Rim Resources, which said it plans raise $5.3 million to accelerate drilling at its Kouri gold project in Burkina Faso which has retuned “exceptionally high-grade gold intercepts” including 7m at 121.2g/t gold and 1m at 783.8g/t gold.
The announcement follows Golden Rim’s $500,000 placement in July.
Lefroy Exploration (ASX: LEX)
Lefroy Exploration has boosted its cash reserves after receiving firm commitments to raise over $3.8 million, with its largest shareholder Gold Fields scooping up 3.45 million shares.
The company will use the funds to advance exploration and drilling at its wholly-owned Eastern Lefroy gold project in WA.
Calidus Resources (ASX: CAI)
Not to be left out, Calidus Resources reported on Thursday last week it had completed a $9 million placement to institutional investors.
Calidus said it would use the proceeds to fund the completion of a definitive feasibility study at its Warrawoona gold project in the Pilbara, which has a resource of 1.25Moz gold.
Sabre Resources (ASX: SBR)
Meanwhile Sabre Resources revealed it has finalised the terms of a placement which will see it issue 135 million shares at $0.004 each to raise $540,000.
Sabre plans to use the money for exploration and development of its gold assets including the recently acquired Penny West tenements and soon to be purchased Beacon gold project.
Capricorn Metals (ASX: CMM)
Numerous other gold companies have taken advantage of the prevailing high gold prices over the last four weeks with Capricorn Metals revealing last Tuesday it plans to rake in $65 million to accelerate development of its Karlawinda gold project, where construction is planned to begin in the March quarter next year and production 12 months later.
The placement is anticipated to bring Capricorn’s cash balance to about $90 million and the company has already received commitments.
Meteoric Resources (ASX: MEI)
Meteoric Resources is another gold explorer to recently boost its balance sheet after announcing a $2.7 million placement.
The company noted it had received firm commitments from institutional and sophisticated investors and the cash will be used to accelerate exploration at its recently acquired Juruena and Novo Astro gold projects in Brazil.
Alt Resources (ASX: ARS)
Earlier this month, Alt Resources announced an oversubscribed placement that will add $4 million to its cash pile.
Alt chief executive officer James Anderson noted the placement was an “outstanding result” for the junior gold sector which has struggled over the last 12 months.
He added the company was “pleased and impressed” with investor support and that is was a “strong endorsement” of Alt’s recent exploration results.
He said placement funds would go towards ongoing drilling and development of its primary Mt Ida project.
Alice Queens (ASX: AQA)
Another gold company to raise funds in August was Alice Queens which is securing $516,000 before costs to begin a drilling program at the Yarindury project in New South Wales.
Numerous gold and copper targets have been delineated at Yarindury that are along strike from Newcrest’s Cadia Valley project.
First AU (ASX: FAU)
First AU has received firm commitments for a $1.5 million share placement with proceeds to be put towards an aggressive exploration program at the company’s wholly-owned Gimlet gold project near Kalgoorlie in WA.
The project has a maiden JORC resource of 68,731oz of contained gold.
Genesis Minerals (ASX: GMD)
Genesis Minerals is locking-in $6 million via a non-renounceable entitlement offer, which, once completed, will help the company advance the Ulysses asset including resource extension drilling and ongoing feasibility study work.
A resource of 7.1Mt at 3.3g/t gold for 760,000oz has been firmed up at Ulysses.
Citigold Corp (ASX: CTO)
Charters Towers’ current owner Citigold Corp has launched a share purchase plan enabling current shareholders to subscribe for up to $15,000-worth of shares at $0.005 each.
The plan closes on 2 September and Citigold will notify the market of final funds raised.
Citigold plans to resume underground mining at Charters Towers, which is on care and maintenance, but hosts a 11Moz gold deposit.
Titan Minerals (ASX: TTM)
Titan Minerals has raised $6 million to finance its strategic initiatives which include gold and copper exploration and operation of its gold treatment business in southern Peru.
The company is also looking at further gold and copper project acquisitions across Peru, Ecuador and other regions in the world.
Red 5 (ASX: RED)
Gold producer Red 5 secured a $20 million working capital facility with Macquarie Bank to refinance and enhance the terms of its current gold loan facility with Asian Investment Management Service.
As part of the facility, Red 5 will hedge about 13,000oz of gold produced each quarter over the loan term which expired on 30 June 2021.
Red 5’s Darlot asset has been producing for more than 30 years, generating 2.8Moz of gold. In the June quarter, the mine produced 30,000oz gold.
Spectrum Metals (ASX: SPX)
One of the larger equity raisings is Spectrum Metals with a $7.25 million placement to carry out “aggressive exploration” at its Penny West gold project.
Drilling has discovered the Penny North high-grade prospect where multiple high-grade intersections have been uncovered including 1m at 99.9g/t gold.
Equus Mining (ASX: EQE)
Via a non-renounceable rights issue and placement, Equus Mining is adding $4.5 million to its cash piles.
Funds raised will be used for a drilling program at the company’s Cerro Bayo gold-silver mine and to advance the Los Domos gold-silver-zinc-lead asset in Chile.
Rimfire Pacific Mining (ASX: RIM)
In late June, Rimfire Pacific Mining announced it was attempting to raise $1.1 million via a rights issue to continue gold exploration at Fifield.
However, Rimfire failed to raise the full amount brining in about $500,000 before costs by late July.
A $300,000 shortfall was placed in early August after the company received commitments – bringing total rights issue funds to $800,000.
Metminco (ASX: MNC)
As part of a takeover bid for Andes Resources Ltd, Metminco released a prospectus to raise $2.33 million.
The capital raising was closed in early August giving Metminco the necessary proceeds to drill its existing and newly acquired copper-gold assets in Colombia, including the key Chuscal target.
BBX Minerals (ASX: BBX)
Brazilian gold explorer BBX Minerals successfully raised $1 million to advance its Tres Estados and Ema projects in the region.
BBX chief executive officer Jeff McKenzie said he was “delighted” with the support the company had received from new and existing investors.
Bellevue Gold (ASX: BGL)
Bellevue Gold topped up its coffers in late July with a $18.5 million placement to institutional investors.
The company plans to use its funds extend resources at its namesake project where 1.8Moz of gold has already been defined with an average grade of 11.1g/t.
Bellevue has also noted that all resources remain open.
Kingwest Resources (ASX: KWR)
Kingwest Resources topped up its coffers with $4 million after placing more than 26.6 million shares at $0.15 each to professional and sophisticated investors.
As part of the placement, Kingwest is acquiring the Menzies and Goongarrie gold projects in WA for a total of $8 million in cash and scrip which will be paid in stages.
Menzies hosts a historic mine that produced 800,000oz gold with an average grade of 19g/t.
Kingwest said it believes Menzies is similar to Bellevue’s flagship asset, which has a similar production history.
Placement proceeds will be used to advance Menzies and Goongarrie and pay some of the acquisition costs.
Southern Gold (ASX: SAU)
In mid-June, Southern Gold announced a fully underwritten $2.3 million non-renounceable rights issue to cover its share of development costs for gold assets held under a 50:50 joint venture with Bluebird Merchant Ventures.
The joint venture is looking to develop the Gubong and Kochang gold projects in South Korea.
A month later Southern Gold made a post rights issue placement giving the company an extra $440,000.
Great Southern Mining (ASX: GSN)
Great Southern Mining revealed a $1.01 million capital raising at the end of July, with the company planning to use the funds to advance the Mon Ami gold project in WA and its assets in North Queensland.
The company is also undertaking due diligence on the Cox’s Find gold project north of Laverton in WA, which has three granted mining leases and historically produced 77,000oz gold at 21g/t.
Artemis Resources (ASX: ARV)
Multi-commodity explorer Artemis Resources has also got in on the act raising $2.7 million via a share purchase plan to reduce debt and move its flagship Carlow Castle project towards a feasibility study.
Carlow Castle hosts a gold-dominant orebody with copper and cobalt credits and has an inferred resource of 7.7Mt at 1.06g/t gold, 0.51% copper and 0.08% cobalt for 260,000oz gold, 38,000t copper and 5,900t of cobalt.
Venus Metals Corp (ASX: VMC)
Venus Metals Corp has secured $1.2 million through a private placement to experienced mining industry professional Christopher Wallin.
Mr Wallin bagged 6 million shares in Venus at $0.20 each – giving him substantial shareholder status with a 5.03% stake in the company.
Funds raised from the undertaking will be used to explore the Youanmi gold project in WA, which is held under joint venture with Rox Resources (ASX: RXL).