Strong demand for a $16 million share placement from local and overseas investors will enable Matador Mining (ASX: MZZ) to expand and accelerate exploration activities at its flagship Cape Ray gold project along the highly-prospective yet underexplored Cape Ray Shear in Canada.
The company completed the capital raising through the placement of 28.5 million shares at $0.56 each, representing an 18% premium to the 10-day volume weighted average price.
Funds raised will be used to accelerate exploration at Cape Ray and will include the expansion of a current 20,000m diamond drilling program to 45,000m targeting brownfields and greenfields discoveries.
The company will also increase its power auger drilling capacity from three to five rigs, and double the coverage of a planned helicopter magnetic program from 40km of strike to 80km.
Matador executive chairman Ian Murray said the placement’s strong demand highlights market support for the company’s plans to systematically test the project’s potential.
“Being able to achieve this is a great result for all shareholders as we reduce dilution while raising additional funds,” he said.
“We can now materially accelerate our work program with the aim of advancing the timing of new discoveries.”
Matador’s shares were issued at a premium under Canada’s flow-through share regime which provides tax incentives to eligible investors for expenditures that qualify as flow-through mining spend under the country’s income tax laws.
The term “flow-through” refers to ordinary shares issued under written agreement with investors, whereby Matador will incur flow-through mining expenditure and renounce any associated tax deductions.
Investors are then entitled to deduct the amount renounced for Canadian income tax purposes.
The share issue was facilitated by Canadian flow-through dealer Peartree Securities Inc.
The placement was managed by Shaw and Partners and Canaccord Genuity (Australia) as joint advisors.
Earlier this week, Matador announced it had appointed Kerry Sparkes to the role of technical advisor, responsible for providing high-level assistance to the Cape Ray exploration team and strategic advice to the board.
Mr Sparkes has over 30 years of experience as a geologist in senior positions with Franco-Nevada Corp, Vale and Rainy River Resources (now New Gold Inc).
He previously worked on the Cape Ray gold project in 2002 during his time with Terra Nova Gold Corp and was involved with the Ovoid discovery within the world-class Voisey’s Bay nickel deposit.