De Grey (ASX:DEG) share price halted amid $125 million cap raise

The gold explorer is raising capital to drive the development of its Mallina Project.
The post De Grey (ASX:DEG) share price halted amid $125 million cap raise appeared first on The Motley Fool Australia. –

The De Grey Mining Ltd (ASX: DEG) share price won’t be going anywhere on Wednesday after the company initiated a $125 million capital raising.

Capital raising overview

The gold explorer is conducting a fully underwritten institutional placement to raise $125 million comprised of 113.6 million new shares representing 8.8% of existing shares on issue.

The offer price of $1.10 will represent a 9% discount to its last traded price of $1.21 on Tuesday, 19 October.

The De Grey share price is expected to remain in a trading halt no later than Friday, 22 October.

What’s the capital raising for?

The proceeds from the offer, together with existing cash, will be used to accelerate the development of De Grey’s “globally significant” Mallina Gold Project.

According to the capital raising presentation, uses of funds include:

$77 million — exploration, infill and other drilling
$17 million — pre-feasibility studies
$8 million — operations support and capital expenditure
$11 million — corporate
$6.5 million — general working capital

The placement follows the release of De Grey’s Scoping Study for the Mallina Gold Project which highlighted average annual production of 473koz over the first five years and 427koz over 10 years. Average all-in-sustaining costs (AISC) are forecast at A$1,111/oz over the first five years and $1,224/oz over 10 years.

To add some perspective, Evolution Mining Ltd (ASX: EVN), which fetches a market capitalisation of about $6.8 billion, produced 680,788 ounces of gold in FY21 at an AISC of A$1,215/oz.

Management commentary

De Grey Managing Director Glenn Jardine commented on the placement:

De Grey is pleased to announce the launch of a fully underwritten Placement, which displays a high level of investor support for our growth strategy at the globally significant Mallina Gold Project.

The Placement provides De Grey with a significant capital runway to undertake exploration activities to expand the existing resource, and progress project development studies. De Grey will now have a significantly strengthened balance sheet which provides a strong platform to unlock further value at Mallina.

De Grey share price snapshot

The De Grey share price has had pretty smooth sailing this year given the weakness in gold prices.

It’s up 9% year-to-date compared to large-cap peers such as Northern Star Resources Ltd (ASX: NST) and Evolution Mining that have both tumbled 28% in 2021.

The post De Grey (ASX:DEG) share price halted amid $125 million cap raise appeared first on The Motley Fool Australia.

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More reading

Why is the De Grey Mining (ASX:DEG) share price higher on Friday?

Which ASX shares are leading the way in the ASX 300 today?

Which shares are the biggest winners and losers on the ASX 300 today?

Why De Grey Mining, Gold Road, Nick Scali, & Redbubble shares are racing higher

De Grey (ASX:DEG) share price jumps 4% on gold project update

Motley Fool contributor Kerry Sun has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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