PNX pulls off a funding feat for Fountain Head
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Special Report:Raising capital at a premium to your share price would appear nigh on impossible in this market, but that is exactly what PNX Metals (ASX: PNX) has done with the help of German cornerstone investor Delphi.
PNX, which is currently focused on developing a heap leach gold operation at Fountain Head, part of its Hayes Creek zinc-gold-silver project, in the Northern Territory, will soon see an injection of $1.1 million in new funding through the exercise of 74 million options held by Delphi at a price of 1.5c each.
The Company has also signed subscription agreements with sophisticated investors to raise a further $500,000 through the placement of 33.3 million shares – again at a price of 1.5c each.
PNX shares closed at 0.4c on Tuesday, meaning both the exercise of options and the placement are being done at a premium of more than 200%.
“These fundraising initiatives demonstrate the support for our near-term development strategy of generating early cashflow from Fountain Head and show that Delphi and other investors recognise the significant underlying value in our assets,” PNX managing director James Fox said.
The funds will be put towards the completion of feasibility and technical studies on the Fountain Head heap leach project, which PNX believes could be in production by the first half of 2021.
Earlier this week the company announced some excellent drill intercepts from an area between the Fountain Head and Tally Ho lodes including 14m at 9.22 g/t gold from a depth of 17m, 2m at 12.69 g/t gold from 12m and 2m at 24.03 g/t gold from 66m.
“Combined with favourable movements in the gold price, these new high-grade areas being delineated within the proposed pit shell have the potential to significantly increase the project value,” Fox said.
PNX announced a maiden indicated and inferred Mineral Resource for Fountain Head of 2.58 million tonnes grading 1.7 g/t gold for 138,000 ounces in mid-2019.
An updated resource, factoring in all the results from recent drilling, is expected to be released in late April.
Heap leaching typically involves crushing and stacking the ore on open-air pads which are then irrigated with a dilute cyanide solution, resulting in the leaching of the gold. The gold rich liquor can then be processed to separate the gold into dore.
PNX views heap leaching as a low-cost option for bringing Fountain Head into production that could see the project develop into a central processing hub for stranded gold and base metals assets in the region.