Cygnus Gold bolts out of the blocks with 50pc gain in ASX debut
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Junior explorer Cygnus Gold has lit up the boards of the ASX, closing at a 50 per cent premium to its 20c issue price on Monday.
Cygnus (ASX:CY5) reached 35c by early afternoon on its first day on the bourse, giving the company an initial market value of around $21.2 million. By the closing bell, shares had cooled to 30c.
The outcome exceeded the company’s expectations, managing director James Merrillees told Stockhead.
“I think it reflects a lot on the team and the quality of the projects and the backers that we’ve had,” he said. “We had very strong demand in the IPO and we had to scale back allocations.”
The IPO raised the maximum $6 million under the prospectus, boosting cash in hand to $6.3 million.
Cygnus has a 5392 sq km land package, comprising exploration licences and applications, in the Wheatbelt district of Western Australia, where it is looking for gold and other minerals.
The company has two earn-in agreements with larger rival and successful gold player Gold Road Resources (ASX:GOR).
Gold Road, which is well known for its success on the Gruyere gold project that it is now in construction, is one of Cygnus’ backers with a $750,000 cash injection.
Most of the cash raised will be used for drilling and exploration programs across Cygnus’ projects, but the initial focus will be on the high-grade Bottleneck prospect and other similar targets at the Stanley project.
Cygnus isn’t wasting any time and has already mobilised a rig to site and begun drilling.
Drilling at Bottleneck is aimed at following up previous high-grade, near surface hits, including 21 metres at 3.3 grams per tonne, Mr Merrillees said.
“We’re hoping to emulate that and then really follow up a down plunge extension of the mineralisation that we’ve recognised through the remodelling of old data.
“There has only been four deep holes ever drilled in the whole 20 kilometre-long strike length of that greenstone belt.”
Cygnus expects to have some results from the current drilling program in the next six to eight weeks.