Red 5 set to tap market for $125m

Gold miner Red 5 (ASX: RED) is set to test investor appetite for emerging gold projects with what is understood to be a $125 million raising to help fund development of its King of the Hills gold project near Leonora (reports The West Australian).
27th March 2020
Resources Rising Stars

Gold miner Red 5 (ASX: RED) is set to test investor appetite for emerging gold projects with what is understood to be a $125 million raising to help fund development of its King of the Hills gold project near Leonora (reports The West Australian).

WestBusiness understands the raising, in two tranches with the second subject to shareholder approval, will be priced at 18¢, representing a 23.4 per cent discount to its closing price on Wednesday of 23.5¢.

While the gold price remains buoyant, uncertainty surrounding the coronavirus and doubts about developing gold projects caused by recent well-documented disasters is likely to weigh on some investors’ minds.

This month, Red 5 upgraded the indicated and inferred resource at King of the Hills to 90.7 million tonnes at 1.4 grams per tonne for 4.1 million ounces of gold.

The company expects to complete a final feasibility study for the project in the September quarter with construction targeted to begin before the end of the year.

Red 5 wants to turn back the clock 16 years to when the historic King of the Hills was owned by Sons of Gwalia, which had big plans for the mine’s expansion prior to its collapse under complex and misplaced gold hedging arrangements.

The miner hopes to expand the old open pit at the project and also drive further underground.

It hopes low-grade ore from the pit can supplement high-grade ore from underground for processing in a new 4Mtpa mill.

Red 5 has ambitions of potentially tripling its annual production to 300,000oz in the next three to four years.

It already produces about 100,000ozpa from King of the Hills and its Darlot mine to the north combined.

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