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http://news.theage.com.au/breaking-news-business/catalpa-raising-money-for-wa-gold-mine-20090305-8pg6.html

Catalpa Resources Ltd aims to complete its $100 million capital raising this month, as it moves towards commissioning its first gold mine in Western Australia.

The junior explorer on Wednesday secured a $67.5 million finance facility from Macquarie Bank for its Edna May project, despite tight financing markets worldwide.

Catalpa's plans to commence mining in mid-2010 contrasts against a spate of recent mine closures, due largely to a scarceness of project capital.

Catalpa managing director Bruce McFadzean said the estimated capital expenditure for the Edna May project, 2km from the small town of Westonia, was $92 million.

He said cost savings should shave between five and 10 per cent from that figure.

Mr McFadzean said the capital raising target had been rounded up to $100 million so that the miner would not need to return to the market for the foreseeable future.

He said a forthcoming equity raising of around $32.5 million would include an offer to existing shareholders.

"The fact Macquarie Bank backed us before the equity raising was complete speaks volumes about the robustness of the project," he said.

He said it indicated also the bank was bullish about ongoing gold price strength and tipped it would remain around the current level for some time.

The spot gold price in Sydney was $US913.10 per fine ounce on Thursday, up 85 US cents from the previous close.

Under a hedging facility with Macquarie Bank, Catalpa has sold forward 352,316 ounces at $A1,544 ($US993) per ounce until 2014/15.

The Macquarie arrangement includes a standby mezzanine facility of up to $10 million.

Catalpa has agreed to issue Macquarie Bank options over the explorer's fully paid shares, which could give the financier a stake of up to about eight per cent in Catalpa.

Resource investment group Lion Selection Ltd has a 51 per cent interest in Catalpa, which will be diluted after the equity raising.

The Edna May mine is expected to realise an average annual cash operating margin of $90 million, after royalties.

Mr McFazdean said the company would eventually eye acquisition opportunities in the gold sector, possibly overseas, but Edna May would remain its key focus for some time.