Norton to raise $27.7 million

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THE BOURSE WHISPERER: West Australian-based gold producer Norton Gold Fields has executed a Subscription Agreement with Zijin Mining Group for the private placement of just over 138 million shares at a price of $0.20 per share.

Once completed, the placement will raise $27.67 million giving Zijin’s a 16.98 per cent shareholding in Norton.

“We are very pleased to welcome Zijin as a strategic shareholder of Norton,” Norton Gold Fields managing director Andre Labuschagne said in the company’s announcement to the Australian Securities Exchange.

“Zijin has a strong technical and operational background in gold mining which will complement our own expertise.”

Norton said it intends using the funds raised from the placement to reduce debt levels from the current level of $80 million to $50 million.

The funds will be combined with Norton’s cash reserves to make a prepayment of $30 million of an outstanding principal owing due to terms of an $80 million Secured Note issued by the company Norton to Merrill Lynch International.

Norton said the prepayment would enable it to avoid an interest rate step-up on the Note as well as the payment of a deferment fee to Merrill Lynch.

The placement will consist of two tranches:

– Tranche 1 -the issue of 72,100,000 shares at $0.20 per share to raise $14,420,000.

The issue of the Tranche 1 shares is conditional upon Zijin receiving the necessary Chinese regulatory approvals, however Norton said it expects the Tranche 1 shares will be issued within 3 business days of its announcement.

At the completion of Tranche 1, Zijin shareholding in Norton will be 9.96%.

– Tranche 2 – the issue of 66,250,000 shares at $0.20 to be issued no later than 16 September 2011, raising $13,250,000.

The issue of the Tranche 2 shares is conditional upon:

– Zijin receiving the necessary Chinese regulatory approvals;

– Zijin receiving FIRB approval; and

– Norton shareholder approval.

At the completion of Tranche 2, Zijin will have a shareholding in Norton of 16.98%.

Approval for the issue of Tranche 2 shares will also need to be gained from Norton shareholders.