Cash-strapped Eastern Goldfields seeks $30m bank balance boost
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Embattled Eastern Goldfields – which had a measly $37,000 to its name at the end of September – is seeking to raise $30 million.
Eastern has signed up New York-based mining investor Hawke’s Point Holdings – an affiliate of diversified investor Tetragon which is worth about $US2 billion – as a cornerstone investor.
Hawke’s Point will take up 87.5 million shares at 20c per share for $17.5 million. Eastern must also raise an additional $12.5 million, through subscription of 62.5 million shares at same price per share, from investors under the deal.
The price represents a 15 per cent discount to the last traded price of 23.5c before Eastern was suspended from trading in August.
Eastern is seeking commitments from sophisticated, professional and institutional investors for the placement.
The money will go towards exploration, resource development and feasibility studies at its Mt Ida and Menzies projects as well as general working capital.
All shares issued under the placement will be issued with a 1-for-1 free attaching unlisted option to acquire a share in Eastern.
Eastern has previously said it expects to receive another $6 million from research and development rebate claims plus $2.8 million in diesel fuel and GST rebates.
Today’s news will no doubt help in getting the stock reinstated to the ASX. It is also a sign that Eastern is rebuilding itself after a horror run.
Eastern was threatened with a protest by disgruntled contractors at the Diggers & Dealers conference in Kalgoorlie in August.
This was followed by the Supreme Court ordering Eastern Goldfields be wound up and a liquidator appointed after mineral tester Genalysis Laboratory Services lodged a wind-up application after going unpaid for work at Davyhurst.
The company expects to announce the appointment of Chief Executive Officer and Chief Operating Officer sometime this month.
Eastern has a market cap of around $132 million.