De Grey Mining has launched one of mining’s loftiest capital raises in recent years, as the company advances the development of its Hemi gold project in the Pilbara region of WA.
De Grey is raising $600 million through a $344 million institutional placement and a 1-for-7.95 entitlement offer to raise the additional $256 million, each priced at $1.10 per share. This is a 13 per cent discount from De Grey’s closing share price of $1.265 at close on May 7.
“The underwritten equity raising represents a landmark milestone and a key de-risking event for De Grey,” De Grey managing director Glenn Jardine said.
“The significant level of support received from key stakeholders to date provides strong validation of the high-quality nature of Hemi and our strategy of becoming a material Australian gold producer.”
De Grey is in the midst of a financing campaign, with the equity raise set to unlock debt financing packages. The company said it remained on track to receive credit approved term sheets from debt financiers in mid-2024.
Together with existing cash, proceeds from the equity raise – which represents the entirety of Hemi’s equity requirement – will support the ordering of long-lead items, engineering and early works, initial infrastructure and construction costs, as well as further exploration and studies.
Full construction activities are expected to commence at Hemi in the second half of 2024, with a two-year construction period to follow. De Grey then hopes to achieve first gold production in the second half of 2026.
Jardine believes Hemi has the potential to be an important regional and international asset.
“We recently undertook an option agreement with Kalamazoo for their Ashburton project, and that project, subject to due diligence, has the potential to deliver concentrate into the Hemi plant once it’s built,” he told Australian Resources & Investment in February.
“That also applies to the potential to process international and other concentrates from Australia.
“Hemi is a really important project for the Pilbara because the region has the potential to become a regional, strategic processing hub rather than just being an exporting location.”
He said the Hemi gold mine can also expand the Pilbara’s commodity profile.
“Large-scale gold mining isn’t necessarily something that the Pilbara has seen before, so I think it’s really good in terms of diversification of the commodity mix as well as the technological mix,” Jardine said.
“This will create opportunities for people in terms of training and development to be able to work in a gold mine as opposed to what they’re used to working in, which is probably predominantly iron ore.”
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