$1.2 million cash injection will help Godolphin chase gold in the hot Lachlan Fold belt

Godolphin has raised $1.2 million from sophisticated and professional investors, with another $300,000 sought via a share purchase plan
Diamond drilling to resume in December quarter at Lewis Ponds gold and base metals project to broaden the existing JORC resource
Diversified strategy in rare earths and precious metals helps GRL maintain the pace at any point in the cycle

Special Report: Godolphin Resources will turbocharge exploration at its Lewis Ponds gold and base metals project in New South Wales amidst unprecedented interest in the hot Lachlan Fold Belt region from majors.

As much as $300 million of investment has been pledged by mining giants in deals to unlock major gold and base metals prospects over the past 18 months.

It’s set the alarm bells ringing for many investors and companies on the attractiveness of Godolphin Resources’ (ASX:GRL) Lewis Ponds asset.

The project near the city of Orange already hosts an inferred mineral resource of 6.2Mt at 2g/t gold, 80g/t silver, 2.7% zinc, 1.6% lead and 0.2% copper. The metal content of its gold inventory alone is a hefty 398,000oz.

But Godolphin thinks there is the potential to identify a much bigger prize in a larger mineral system extending some 9km to the south-east.

With that in mind, GRL has seen off interest from external parties and raised $1.2 million from sophisticated, professional and institutional investors via a 1.25c per share placement, around a 16% discount to its last traded price, with a $300,000 share purchase plan also launched for existing holders at the same price.

The raise was cornerstoned by existing shareholder, American Rare Earths (ASX:ARR), which will hold a 19.9% stake in the company following completion.

That funding will be used on diamond drilling and metallurgical test work at Lewis Ponds in the December quarter, along with working capital.

“While there has been considerable interest in the project from a number of parties in recent months, the Board and management believes there is a significant amount of value to be unlocked at Lewis Ponds and this new capital will allow us to pursue that opportunity,” Godolphin managing director Jeneta Owens said.

“We intend to undertake a diamond drilling program at Lewis Ponds to further define gold and silver mineralisation, to increase the confidence of the resource and provide samples for metallurgical testing of the mineralisation to advance the processing options for this mineralisation style.”

Diversified project suite

As part of the raising, Godolphin’s top shareholder – ASX-listed rare earths company American Rare Earths – subscribed for $510,000, maintaining a 19.9% stake.

That’s a recognition of the exciting potential of its Narraburra rare earths project, which contains a mineral resource estimate of 94.9Mt at 739ppm total rare earth oxide and a high-grade core of 20Mt at 1079ppm TREO.

Importantly, Godolphin’s dual track approach of holding both rare earths and gold projects helps it focus capital raising initiatives on different commodities as markets cycle.

Though rare earths prices are depressed, work is still ongoing to lay the foundations for Narraburra’s eventual development when demand for the magnet metals begins to outpace supply.

“This capital raise highlights the benefit of the Company’s diversified project suite, which at a time of depressed rare earth prices will allow us to capitalise on the near-term value in our base and precious metal assets,” Owens said.

“While exploration will be focused on Lewis Ponds, metallurgical testing to produce a MREC (mixed rare earth carbonate) continues for our Narraburra Rare Earth Project, which can be marketed to potential partners.

“We look forward to providing further updates in the coming weeks across all the Company’s various workstreams, specifically as drilling progresses at Lewis Ponds.”

This article was developed in collaboration with Godolphin Resources, 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.