Saracen to raise $65.2 million

THE BOURSE WHISPERER: Gold producer Saracen Mineral Holdings has completed a placement of 73.8 million new fully paid ordinary shares at a price of 68 cents per share to raise $50.2 million.

The company is also launching an underwritten Share Purchase Plan to raise a further $15 million.

The maximum amount the company intends raising will be $65.2 million before expenses.

Saracen will use the raised from the placement and SPP to pay for an increased and accelerated exploration budget that it will spend across its tenement holdings.

This will entail drilling and development work at Saracen‘s Porphyry and Whirling Dervish mines, and potential bolt-on acquisitions.

Exploration funding on the company’s Red October and Butcher Well prospects will receive a boost to the tune of $12 million for the current year, while its total exploration budget will be lifted towards $35 million.

The company said the new funding would enable it to accelerate its strategy of targeting an increase in group gold production from the current 120,000 ounces per annum towards 250,000 ounces per annum by 2015.

“Saracen has received very strong support for this capital raising,” Saracen Mineral Holdings executive chairman Guido Staltari said in the company’s announcement to the Australian Securities Exchange.

“Given the exciting growth options ahead of us, and the elevated gold price environment we find ourselves in, it makes good sense for us to lift our sights to much higher production levels, and a more aggressive exploration strategy.

“Our 250,000 ounces per annum production target is being backed by an aggressive push in the northern district, at the Red October and Bucher Well projects, with parallel drilling and development programs in the southern district, particularly at the Porphyry and Whirling Dervish projects.”

The company is confident increased production will result in a greater contribution of high-grade underground ore sources to the Carosue Dam processing plant.

The company suggested a production increase could come from the contribution of another plant, depending on drilling and feasibility study results.

This would be fed by ore sourced from the Red October mine, as well as underground mines at Porphyry and, subject to further drilling results, Whirling Dervish.