Genesis Minerals (ASX: GMD) has received a significant vote of confidence from Investmet, with a capital raising agreement that will support exploration of Genesis’ existing assets in South America.
Genesis plans to raise $3.1 million through a two stage capital raising, comprising a placement to Investmet and nominees followed by a fully underwritten entitlement issue.
Importantly, the raising will be completed at a premium to current market prices.
In stage one, 18 million shares will be issued to Investmet at a price of $0.10 per share to raise $1.8 million.
Investmet will also be issued with 18 million free unlisted options, available in three lots of 6 million shares, exercisable at $0.12, $0.15 and $0.20 respectively over a total 36 month period.
Additional subscriptions for a further 4 million shares and 4 million options will be accommodated as required.
The placement is subject to shareholder approval.
Under stage two of the capital raising, Genesis will offer a fully underwritten one for eight non-renounceable pro-rata entitlements issue at $0.10 to raise about $1.26 million.
Funds from the capital raising will be used to advance exploration at Genesis’ Poncha and Los Opeñas Gold Projects in San Juan, Argentina, with a 5,500 metre drilling program planned in the March 2012 quarter.
They will also fund exploration at the Dinamarquesa and Cerro Verde Copper-Gold Projects in northern Chile.
Drilling will be carried out at Dimarquesa in the March quarter to follow up on recent encouraging results from a high grade gold vein system and a porphyry copper-gold system, with results from recent drilling being interpreted.
At Cerro Verde, a program of mapping and sampling is underway.
Prior to the completion of the placement, Investmet will make a loan of $500,000 available to Genesis for working capital, repayable on a maturity date of April 30, 2012.
This loan can be converted to shares.
Shares in Genesis jumped 75% to $0.125 in morning trade.