AFR: Red 5 asks investors for fresh $80m at 23pc discount


Serial raiser Red 5 Ltd has tapped Canaccord Genuity and Petra Capital to raise another $80 million in fresh equity.

The company’s shares went into a trading halt on Tuesday morning.

The deal’s expected to be done via a two-tranche placement of new shares at 13.5¢ each. The pricing was a 22.9 per cent discount to the last close and 26.7 per cent lower than the 10-day volume weighted average price.

Red 5 planned to chase up the placement with an $8 million share purchase plan and up to $2 million in oversubscriptions.

Funds raised would be used repay creditors ($30 million), shore up its balance sheet and working capital ($25 million), and drilling and evaluation of optimal processing ($10 million), according to the term sheet sent to potential investors. The group had $26 million in cash and bullion at December 31.

Red 5 completed the construction of its King of the Hills project and produced the first gold in June last year and began commercial production in mid-December.

But it has struggled with higher costs in ramping up production. It raised $60 million to help in September, and had spent the bulk of it by the end of the year. It was also left out of Leonora gold consolidation, which saw St Barbara and Genesis pair off (Genesis also bought Dacian) but Red5 and Kin Mining were the two businesses left out.

Canaccord and Petra called for bids by 4:30pm Tuesday for Asia Pacific investors and by 8am Wednesday for the rest of the world.

Extract Source: The Australian Financial Review