OreCorp Limited (ASX:ORR)- an ASX-listed gold and base metals developer and explorer is all set for the placement of 45.2 million ordinary shares at an carrying or issue price of $0.30 per share to institutional investors and suggested that the placement attracted strong interest in excess of the shares available to allocate.
The business operations of the Company include Nyanzaga Gold Project in Tanzania, the Hobbes, Jericho and Bunjarra Well Projects in WA, and the Akjoujt South Nickel-Copper-Cobalt sulphide Project in Mauritania.
OreCorp To Raise $13.56 Million Under Institutional Placement
In the status quo, ORR plans to issues 45.2 million ordinary shares, of which it would issue 45 million units in a single tranche on 26 May 2020, while the remaining units (200,000) would be issued post the general meeting, planned for the approval of the subscription of shares under the Placement to OreCorp’s Chairman- Mr Craig Williams.
ORR plans to raise $13.56 million under the placement, and upon completion, the cash position of the Company would surge to ~ $26 million, of which a portion is held in USD to the tune of USD 8.3 million; and,
- The Company plans to use the raised capital for continuing the Definitive Feasibility and Relocation Action Plan studies (DFS and RAP) at the Nyanzaga Gold Project while commencing the pre-development activities while also utilising the fund for further expanding the Hobbes Project along with other business and corporate development opportunities.
ORR also plans to make the final payment of USD 8.05 to Barrick Gold Corp related to the acquisition of Nyanzaga gold prospect, and the Company suggests that the funds would ensure a strong position to gain access to the special mining licence, which would allow the Company to explore across its different prospects.
The Company and OreCorp Tanzania Limited would continue ahead in order to secure the pending grant of the Special Mining Licence from the relevant Tanzanian regulatory authorities, and once the SML is granted the Government of Tanzania would also become an equity holder via acquiring a free carried interest in the gold prospect.
The placement price of $0.30 per share denotes an 11.8 per cent discount on the closing price of the stock on 14 May 2020 ($0.340) and a 7.5 per cent discount on the 5-day volume weighted average price (or VWAP) while reflecting a 5.6 per cent discount on the 30-day VWAP.
The Recent Acquisition of The Cosmo Tenements
ORR recently acquired the Cosmo Holdings (WA) Pty Ltd through its wholly-owned subsidiary- OreCorp Holdings Pty Ltd under the targeting initiative and ground acquisition in Western Australia, which now provides the Company with a 100 per cent interest in the exploration licences E31/1173 and E31/1175 and prospecting licence P31/2119, which together accounts for an area of 34km2.
The Cosmo’s prospect is located in the Yerilla District of the North Coolgardie Mineral Field, and combined tenements of the prospect straddle the Archaean sediment-tuff filled Keith-Kilkenny Rift, with felsic and mafic to ultramafic sequences to the east.
OreCorp acquired the prospect for $50,000 in cash and in 941,529 fully paid ordinary shares in the Company, Cosmo currently holds 1 per cent net smelter royalty interest. The Company believes this acquisition to complement the Hobbes Gold Project.
Operational and Financial Highlights from March 2020 Quarter
During the March 2020 quarter, the Company continued to pursue the grant of the Special Mining Licence for key areas of the Nyanzaga Project and started work to identify drill targets proximal to Nyanzaga within the SML.
ORR also commenced a Mineral Resource Estimate for the Kilimani Prospect, which is about 450m northeast from the open pit at Nyanzaga, while focusing on key activities to immediately shift towards the next phase of studies post receiving the SML.
Over the Hobbes prospect, the Company completed the evaluation of the project and regional historical exploration data, while completing the refinement of both infill drilling of the higher-grade primary mineralised zones and reconnaissance drilling of regional soil along with the historical drill geochemical targets within the wider Hobbes Project.
Over the corporate counter, ORR continued to review a suite of business development opportunities including the implementation of cost-cutting measures, which in conjunction with the temporary reduction in the cash component of the senior management would reduce the cash outflow by ~ $80,000 during the June 2020 quarter.
The Company also estimates that a minimum of $170,000 would be saved during the June 2020 quarter amid the implementation of other cash preventive measures.
Nyanzaga Project Resource Profile
The prospect contains a total JORC 2012 classified resource of 23.70 million tonnes at an average grade of 4.03g/t of gold, containing 3.072 million ounces.
Out of total 23.70 million tonnes, the prospect contains 4.63 million tonnes Measured resources with an average grade of 4.96g/t of gold, containing 0.738 million ounces, 16.17 million tonnes Indicated resources with an average grade of 3.80g/t of gold, containing 1.977 million ounces, and 2.90 million tonnes Inferred resources with an average grade of 3.84g/t of gold, containing 0.358 million ounces.
JORC Classified Mineral Resources (as on 12 September 2017) (Source: Company’s Report)
The Company further aims to secure the SML for the prospect while completing the mineral resource estimate of the Kilimani tenement. ORR would now also finalise and review the geological target proximal to Nyanzaga while progressing towards the permitting pathway and Relocation Action Plan process.
ORR would also move forward with the Definitive Feasibility Study and would further evaluate the regional exploration at the prospect with an aim to delineate and refine other targets while identifying further ground for acquisition.
The stock of the Company last traded at $0.345 (as on 19 May 2020 3:29 PM AEST), up by 1.47 per cent against its previous close on ASX.
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