Reed rattles tin for $10 million raising

THE BOURSE WHISPERER: Emerging gold producer Reed Resources (ASX: RDR) has launched a $10 million capital raising through a Placement and Share Purchase Plan (SPP).

An issue price of $0.18 per Share has been fixed for both raisings.

Reed said the funds raised will be used to maintain appropriate levels of working capital as the company moves into the commissioning phase of the Meekatharra gold project in Western Australia.

Reed is currently in the process of finalising a $19 million debt facility with Credit Suisse, which it said will augment the company’s cash reserves as this facility is finalised and made available.

“Reed is pleased with the very strong support for the capital raising,” Reed Resources managing director Luke Tonkin said in the company’s announcement to the Australian Securities Exchange.

“The additional working capital allows the group to maintain appropriate working capital levels during the commissioning of the Meekatharra Gold Project, which is scheduled for December.

“The Meekatharra gold operations mining contractor commenced mobilising to site from 1 October and has commenced 24 hour mining operations.

“The approval of the Batavia Mining Proposal is expected this week which is another key milestone as the company works towards first gold production.”

Reed is also conducting a $2 million SPP to give its existing shareholders the opportunity to acquire new Shares, at the same price paid by institutional and sophisticated investors under the Placement.

Under the SPP, Reed is offering each eligible shareholder the opportunity to acquire up to a maximum of $15,000 worth of shares.

The offer price of 18 cents represents a five per cent discount to Reed’s closing price on the 16 October 2012, the last full trading day before the announcement of the capital raising, and a 17 per cent discount to the volume-weighted average price (VWAP) of Reed shares during the 20 trading days up to and including 16 October 2012.