Norseman Gold (LON:NGL, ASX:NGX) said today it is carrying out a A$20 million private placing of shares, including the conversion of A$8 million debt into equity.
The cash injection will be used to meet the company’s working capital requirements and will help reduce its creditors.
The fundraiser is being fully underwritten by Tulla Group, the group’s largest shareholder and the investment vehicle of Australian entrepreneur Kevin Maloney. He is now chairman of Norseman.
Moelis Australia Advisory and Ocean Equities will act as joint bookrunners and lead managers of the placing, which will be carried out in two tranches to be completed tomorrow (July 19).
As well as being a significant shareholder in the AIM-listed group, Tulla has also taken over the running of the Norseman Mine, Australia’s longest continuously operating gold operation.
In a recent interview, Maloney said the company had a “great future” as he said he is focused on getting production up to 100-120,000 ounces a year and costs below the magic $1,000 an ounce.
Passing these two milestones creates a hugely cash generative operation.
After that Maloney intends to exploit the huge potential of the area.
The project, which covers 2,360 square kilometres of Western Australia’s Norseman-Wiluna greenstone belt, ultimately has the potential to be a 3-400,000 ounce a year gold producer, he reckons.
The current resource of 3.4 million ounces hints at the huge potential of the Norseman ground. Around 80 years-worth of data has been digitised and requires sifting to unearth multiple potential targets.
The plan after doing this is to find an initial two new potential open pits that would run alongside an underground mine, giving the balanced mix of production.