The Dacian Gold Ltd (ASX: DCN) share price has entered a trading halt today for a $40 million capital raising to accelerate its gold production and extend mine life. Its shares are expected to resume trading on or before market open on Friday.
Dacian Gold runs its flagship Mt Morgans open-pit gold operation near Laverton, Western Australia, and this year acquired the Redcliffe Gold project in WA. The company believes this prospect provides it with an attractive land position to pursue new discoveries.
Dacian Gold announces capital raising to drive growth
The company today announced a $40 million institutional placement at 28 cents per share. This represents an 11% discount to its last closing price of $31.5 cents per share on Tuesday. Investors will be eyeing the Dacian Gold share price when it resumes trading to see how its shares are impacted by the capital raising discount.
Dacian Gold believes FY21 has established the foundations for the company to accelerate gold production and growth opportunities.
Its capital raising presentation highlighted FY21 achievements including investments in open pit operations to drive towards its 110,000 to 120,000 oz production at an all-in sustained cost (AISC) of $1,400 to $1,550 at Mt Morgans. The company has also increased its regional presence at its Redcliffe project, with exploration activities adding 679,000 oz of high-grade mineral resource.
With the $40 million raised, Dacian Gold intends to allocate $20 million to accelerate a significant exploration investment across both Mt Morgans and Redcliffe. This includes approximately 300,000 metres of air core, diamond core and reverse circulation drilling. The drill program will help the company cover a significant area of its underexplored southern tenements.
The company will allocate $10 million to push its discoveries around Mt Morgans, otherwise known as its Greater Westralia Mining Area, into production.
Another $10 million will be allocated to advance its prospective Redcliffe into preliminary production. This will include the completion of mining studies, site establishment and initial pre-stripping activities.
The Dacian Gold share price so far
The Dacian Gold share price fell off a cliff in 2020 after it announced a capital raising on 14 April to “recapitalise” the company. Its shares fell a sharp 59% from $1.045 to 42.5 cents on the day.
Its shares haven’t been able to retest its previous highs so far, chopping between lows of 30 cents and highs of 55 cents.