The rebirth of Eastern Goldfields has taken another step forward with institutional and high net worth investors stepping up to meet a shortfall of funds needed to recapitalise the failed gold producer as Ora Banda Mining.
Clients of broker Hartleys have met a $6 million shortfall from a $7.6 million rights issue while the company will raise a further $22.4 million via a convertible note issue.
The $30 million raised easily meets the $22 million minimum required for the completion of a deed of company arrangement previously agreed to by creditors.
Of the $30 million, $13.3 million will be used to settle the claims of creditors, who will also take up shares in the new entity as part of a debt for equity swap. Trans-Atlantic private equity fund Hawke’s Point will emerge as Ora Banda’s biggest shareholder.
Ora Banda’s new managing director David Quinlivan said the capital raising was the last phase of the transaction and the successful receipt of commitments for $30 million demonstrated market support for the new vision for the company.
The new entity is planning to spend $20 million over 18 months at its flagship Davyhurst project, 120km north-west of Kalgoorlie, to shore up resources and reserves ahead of a definitive feasibility study eyeing a restart of the historically troubled plant.
The project has a resource of 21Mt at 2.6 grams per tonne for 1.8 million ounces spread over 23 deposits. Ora Banda intends to focus on just five advanced deposits comprising 9.2Mt at 2.8g/t for 840,000oz.
Shareholders will meet on June 7 to vote on the recapitalisation and refloat of the company on the ASX.
Eastern Goldfields collapsed in November last year after a $75 million plan to recapitalise the cash-strapped miner fell through. The former company’s major shareholder and executive chairman Michael Fotios was declared bankrupt last month.