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Gold Road Resources Announces $74 Million Equity Raising

Gold Road Resources Announces $74 Million Equity Raising
Gold Road Resources is the owner of one of the largest undeveloped gold projects in Australia.
Apr 27, 2016 By Simon Herrmann Tags: GOR

Australian gold exploration company Gold Road Resources (ASX:GOR) announced a $74 million equity raising, which consists of a $43 million institutional placement and a $31 million entitlement offer.

Gold Road Resources is the owner of one of the largest undeveloped gold projects in Australia.  Its primary asset is the Gruyere Project near Laverton, WA, where the Pre-Feasibility Study (PFS) has determined a Maiden Ore Reserve totalling 81.1million tonnes (Mt) grading 1.24 g/t for 3.2million oz of gold. The Pre-Feasibility study has indicated a “technically sound project estimated to generate in excess of $1billion in undiscounted free cash flow over an initial 12-year project life”. These assumptions are based on an average gold price of A$1,500 per ounce of fine gold.

Proceeds from the Raising to be Used to “De-Risk” Gruyere Project

The new shares will be issued at $0.44, a 4.3% discount to the last closing price of $0.46. Gold Road Resources announced that three high quality North American institutional investors have already committed to subscribe for $20 million, which is 27% of the entire equity raising. The entitlement offers will be conducted as an accelerated 1 for 10 non-renounceable offer.

The proceeds of the raising will be used for a number of reasons, but mainly to provide financial flexibility and “de-risk” the Gruyere Project. Funds raised under the offer will be used to purchase long lead time capital items for gruyere (~$32m), commence early works and front engineering, fund possible Gruyere extensions as well as general working capital.

Ian Murray, Executive Chairman of Gold Road, emphasised that the Gruyere Project is one of Australia’s best undeveloped gold deposits, characterised by a long life and low costs. He further commented on the results: “The decision to raise additional equity now is a strong signal of Gold Road’s commitment to developing the Gruyere Project. It also highlights significant investor interest in supporting Gold Road in this endeavour.”

Gold Road Resources Timetable

The bookbuild of the placement and institutional entitlement offer commenced at 8am this morning and will close tomorrow, 28 April 2016. GOR is expected to resume trading on Friday, 29 April 2016 on an “ex entitlement” basis following the release of the results of the institutional component. Retail shareholders will have the opportunity to participate in the offer from 3 May onwards until the offers closes on 16 May.

Gold Road Resources targets completion of the Feasibility Study (FS) in late 2016, after successful completion of a positive Pre-Feasibility Study (PFS) in February this year.

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Simon Herrmann Author: Simon Herrmann Apr 27, 2016

Simon is a financial analyst at independent research firm Wise-owl specialised in small-mid cap growth opportunities and ethical investment opportunities. Simon's aim is to disrupt the cliché approach to investment decision making as he believes that socially and environmentally responsible behaviour is a necessity to long-term wealth creation. Simon has a deep fundamental understanding of the global financial landscape and has compiled 300+ research reports, valuations and corporate appraisals. Simon is commonly featured in major media outlets and his research is published weekly in The Australian.

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