AFR: WA gold producer Red 5 in $60m share placement


Listed gold play Red 5 Limited was fronting investors with a $60 million single-tranche placement on Thursday morning to fund work at its King of the Hills project in Western Australia.

Red 5 was offering new shares at 16¢ each, a 15.8 per cent discount to the last close and 28 per cent lower than the 10-day volume weighted average price.

Of the $60 million placement, $3.3 million was to be issued to an existing investor after shareholder approval.

Red 5 planned to chase it up with a $6 million share purchase plan.

The term sheet sent to potential investors said Red 5 had completed the construction of its King of the Hills project within budget of $226 million under fixed-price contracts and had produced the first gold on June 5.

It was ramping up mining in the September quarter and expected to produce 26,000 to 27,000 ounces of gold in the period, the term sheet said.

The raise’s proceeds would help Red 5 with working capital and offer costs ($40 million), expansion of the processing plant’s throughput ($10 million), exploration and resource drilling ($7.5 million) and feasibility work for plant expansion ($2.5 million).

Canaccord Genuity and Petra Capital were the joint lead managers and the bookrunners.

Bids were due at 4:30pm on Thursday for Asia Pacific investors and at 8am on Friday for the rest.

Red 5 had a $449 million market capitalisation before the raise.

Extract Source: The Australian Financial Review