Kingsrose Mining has secured firm commitments totalling around A$8.5 million under a two-tranche share placement. Proceeds will be applied primarily to ongoing mine development at the operating Talang Santo Gold Project in South Sumatra, Indonesia.
The placement was strongly supported by existing institutional and sophisticated investors, including several in London.
Tranche one comprises of the issue of approximately 53.8 million shares to raise approximately $6.45 million and will be issued under the company’s available 15% capacity pursuant to ASX Listing Rule 7.1. Tranche two comprises of the issue of approximately 17.2 million shares to raise around $2 million and will be issued subject to shareholder approval at a general meeting in September 2016.
The ongoing Talang Santo development includes completion of the key 5 Level haulage shaft and establishment of capital infrastructure. Sinking of the shaft resumed earlier this month.
Kingsrose says that along with providing additional hoisting capacity, it will provide direct access to the higher-grade areas of the ore body and act as a platform for underground drilling aimed at increasing the Talang Santo resource.
Funds will also be applied to ongoing exploration activities across the broader Way Linggo Project where recent reconnaissance work has highlighted three exciting new targets in the southern part of the project.
Total production for the year to June 30 was 18,641 ounces of gold, which was slightly below the company’s guidance of 19,500-21,500 ounces of gold. The result was impacted by the ongoing challenges presented by the flow of water into the mine.
In an effort to resolve this issue, Kingsrose has commissioned consultants, Mining Plus, to conduct a review of mining practices aimed at increasing productivity and resource recoveries.
Consultants CDM Smith will conduct a hydrological review aimed at providing water management solutions to reduce to flow of water into the mine and Quattro Project Engineering will assist with designing suitable pumping arrangements for the 5 Level.
On completion of the Mining Plus review, Kingsrose will publish production and cost guidance for the 2017 financial year.
Kingsrose executive chairman John Morris said the raising would underpin the company’s strategy to capitalise on the value of Talang Santo. “Talang Santo is an outstanding ore body which can support substantial, low-cost production thanks to its high grades and access to existing infrastructure, including a fully-owned plant.
“The 5 Level haulage shaft holds the key to unlocking this value. The combination of the access this shaft will provide and the prospect of introducing more efficient mining methods following the reviews now under way will maximise our ability to extract the true value of the project.”