Ausgold snares $35 million in placement that sets course to Katanning gold FID

• Ausgold secures commitments for $35 million in institutional placement
• Funds will ‘accelerate’ path to FID on 2.44Moz Katanning gold project, which could produce up to 140,000 ounces per annum
• Directors put skin in the game with $150,000 investment

Special Report: Ausgold is accelerating along a path to a final investment decision on its 2.44Moz Katanning gold project in WA after raising $35 million in a placement to sophisticated and professional investors.

It comes less than a fortnight after the completion by Ausgold (ASX:AUC) of a landmark definitive feasibility study, which projected the operation in WA’s Great Southern region would generate 1.14Moz of gold over a 10-year mine life.

That would include 140,000ozpa over the operation’s first four years, backed by a 1.25Moz ore reserve, with payback of its $355 million pre-production capex expected to take just 13 months at a conservative Aussie dollar gold price of $4300/oz.

Bullion today is fetching close to $5100/oz.

The proposed mine is on the home straight to a decision to mine after leading offshore and domestic instos, including new and existing shareholders, backed in Ausgold in the placement, completed at 57c per share, a discount of just 7.3% to its last traded price of 61c.

That will enable Ausgold to purchase long-lead items, continue exploration at the KGP and acquire freehold land at the site.

Some of that is already under option by AUC, with exploration drilling to focus on near-mine and regional targets.

More from Ausgold: Katanning all set for feasibility and financing milestones

Skin in the game

Ausgold directors will subscribe for $150,000 on top of the $35m placement, subject to approval from shareholders.

That’s typically a positive sign for investors, with the people closest to the fire backing themselves and their company in to deliver.

That includes $100,000 from non-exec director Paul Weedon and $50,000 from executive chairman John Dorward, who says Ausgold is navigating a journey directly to Australia’s gold mid-tier.

“The recent on-time and on-budget successful completion of the Definitive Feasibility Study for the Katanning Gold Project was a major milestone on the road to Ausgold becoming Australia’s next mid-tier gold producer,” Dorward said.

“This new capital stands us in good stead to progress works in relation to our next goal of rapidly accelerating the development of the KGP to a final investment decision and continuing to explore our extensive tenement holding.

“I am delighted with the support of many of our existing shareholders and welcome a few new high-calibre institutional investors to the Ausgold register.”

Canadian insto Dundee Corporation subscribed for $2m in the SCP Resource Finance and Euroz Hartleys-led placement, which was co-managed by Canaccord Genuity.

That will give the firm a 10.08% stake once the placement is finalised, assuming it obtains approval from Treasurer Jim Chalmers under the Foreign Acquisitions and Takeovers Act.

This article was developed in collaboration with Ausgold, a Stockhead advertiser at the time of publishing.

This article does not constitute financial product advice. You should consider obtaining independent advice before making any financial decisions.