Sipa Resources Ltd (ASX:SRI) has secured firm commitments to execute a well-supported $1.5 million share placement to fund its field programs over FY22.
The gold and base metals explorer will issue around 25.4 million shares at 5.9 cents each to raise the fresh funding, which will support exploration over its Western Australia-focused portfolio.
Sipa is currently conducting aircore drilling over its Warralong project, while diamond drilling is set to kick off at Wolfe Basin in the December quarter.
The company entered a trading halt on Monday in lieu of the news but has since emerged from the freeze to trade as much as 6.5% higher to 6.6 cents per share.
Supporting active exploration
Speaking to the placement results, Sipa managing director Pip Darvall said: “This capital raise, at a nominal discount, will support Sipa’s ongoing active exploration programs and, in particular, a number of drilling programs across our Western Australian portfolio of gold and base metal projects.
“The solid support from the specialist resources investment fund represents a positive endorsement of the approach we have been taking.”
The specialist fund in question is a new joiner to the Sipa register.
Commenting on the participation of the specialist fund in the capital raise during Proactive’s Resources Webinar, Darvall confirmed: “It is the first time it has invested in Sipa.
“It’s really encouraging to have that type of investor on board, it’s a great validation of what we’re doing.”
Raising details
With shares issued at 5.9 cents apiece, the placement price represents a 5% discount to Sipa’s 15-day volume-weighted average price up to and including September 17.
The 25.4 million placement shares will represent around 12% of the company’s share capital, with roughly 205 million ordinary shares on issue.
Sipa expects the placement to settle on Wednesday, September 22, with shares to be issued shortly after.
Exploration in WA
Sipa has a broad project portfolio that covers several prolific exploration and mining districts in WA, from the Paterson to Pilbara and Murchison regions.
At Paterson North, a copper-gold exploration play, the company is engaged in a $12 million farm in and joint venture agreement with mining titan Rio Tinto Limited.
Further north and east, Sipa is exploring for copper, lead and zinc at Wolfe Basin, a sediment-hosted base metals play.
The first drill program at the asset intersected as much as 2.9% lead and 0.5% copper, with far more ground to be tested along a prospective horizon that stretches for more than 40 kilometres.
To the west, the Barbwire Terrace project represents exposure to WA’s emerging Misssissipi Valley-Type (MVT) province with zinc exploration opportunities as well as nickel and gold prospectivity. This project is held in a joint venture with fellow ASX-lister Buru Energy Limited.
Heading south, the Warralong gold play is where Sipa boasts a large landholding, situated along a major structure that’s parallel to known deposits.
This project is prospective for intrusion-hosted gold and lithium pegmatites in the north Pilbara region in a ‘lookalike’ structural setting to recent discoveries in the district.
Down in the Murchison district, the company recently picked up a gold project within a prolific mineralised belt that’s ripe for further development.
At Skeleton Rocks, Sipa is advancing across previously untested greenstone belts that sit along major gravity ridge structures in the heart of the state’s goldfields.
Finally, the 100%-owned Uganda Base Metals Project contains an intrusive-hosted nickel-copper sulphide discovery with significant scale potential.
Sipa continues to hold discussions with potential partners to fund further exploration at this location.
What’s to come?
Over the FY22 season, the company is particularly focused on its wholly-owned projects at Warralong and Wolfe Basin.
Sipa hit the halfway point in its 4,000-metre aircore campaign over Warralong in August, while a diamond drill rig will start turning soil at Wolfe Basin next quarter.
The company recently completed a geographical survey over its Paterson North asset, which it holds an 89% stake in under its partnership with Rio.
Between now and the end of June 2022, Sipa will use the capital raise funds to:
- Execute more reconnaissance drilling at Warralong;
- Conduct diamond drilling over IP targets at Wolfe Basin;
- Embark on the maiden drilling campaign at Skeleton Rocks and Barbwire Terrace; and
- Generate other projects.
The fresh funding from the placement will also cover general working capital requirements.