Spartan Resources (ASX: SPR) has launched an $80 million fully-underwritten equity raising to accelerate exploration and development of the Dalgaranga gold project in Western Australia’s Murchison district.
It will comprise an institutional placement to raise approximately $47m and a one-for-17 pro rata accelerated non-renounceable entitlement offer of 56.8 million shares to raise $33m.
The raising will be conducted at a fixed offer price of $0.58 per share, representing an 11.5% discount to the last closing price of $0.65 per share on 17 April.
It will result in the issue of 138 million new shares representing approximately 14% of existing Spartan shares on issue.
Spartan has appointed Canaccord Genuity (Australia), Sternship Advisers and Euroz Hartleys as underwriters and joint lead managers to the equity raising.
Herbert Smith Freehills will act as legal adviser.
Expanded campaign
Proceeds of the raising will be used to underpin an expanded exploration campaign at Dalgaranga over the next 18 months.
It will see $29m put towards accelerated resource extension drilling at the high-grade Never Never, Pepper and Gilbey’s Complex discoveries and associated “lookalike” targets at Sly Fox, Four Pillars and West Wings.
Another $6m will be allocated to the progress of feasibility and optimisation studies for these prospects.
Spartan has also budgeted $38m for the development of an underground exploration decline, scheduled to commence in the second half of this year.
The decline will take underground development to within an estimated 100 metres of the Never Never orebody, which has a current mineral resource of 952,000 ounces grading and average 5.74 grams per tonne gold.
Approximately $9m will be put towards site infrastructure early works ahead of a final investment decision to restart Dalgaranga, while $24m will be spent on care and maintenance, corporate costs and working capital and another $4m will cover transaction costs.
‘Landmark’ raising
Spartan chief executive officer Simon Lawson said the “landmark” raising would put the company in a strong position to deliver on the potential of Dalgaranga.
“The proceeds will allow us to establish an underground decline to cost-effectively drill-out the new Pepper discovery and Four Pillars to a very high level of definition, while also testing other ‘look-alike’ targets in the vicinity,” he said.
“Our team is committed to ensuring a thorough and diligent approach is taken to the delineation of the high-grade orebodies at Dalgaranga.”
“This capital raising will ensure we have the balance sheet strength to progress a robust and thorough restart plan and the financial flexibility to commence early works in advance of a [final investment] decision.”
Pepper discovery
Spartan’s equity raising follows a run of exploration success at Never Never and the recent discovery of the Pepper high-grade lode that returned a best intersection of 17.5m at 15.9g/t gold including including 9.22m at 27.89g/t.
Pepper sits 90m to the south of Never Never and is reported to display the same mineralisation characteristics and grades.
Spartan said its location was in an “extremely favourable” position as any future mining access scenario would commence at the Gilbey’s open pit and pass right by the new discovery on the way to Never Never.
Pepper is believed to validate Spartan’s exploration thesis for Dalgaranga and will be a key focus for its next drilling campaign along with the Sly Fox, Four Pillars and West Wings targets.
Care and maintenance
The Dalgaranga project produced over 70,000oz of gold in 2022 before being placed on care and maintenance in November that year.
The project was subject to a strategic review designed to preserve the value of its extensive infrastructure and resource base while developing a new, sustainable operating plan.
In February 2023, Spartan announced an 18-month exploration and strategic plan targeting a minimum 300,000oz reserve at Never Never at a grade exceeding 4g/t gold, a minimum 600,000oz resource at a grade exceeding 5g/t gold and the development of a five-year mine plan aimed at delivering gold production of up to 150,000oz per annum.
The strategy is centred around an aggressive exploration program at Never Never to facilitate resource expansion, reserve definition and near-mine exploration drilling at Four Pillars, West Winds and Sly Fox.
SPR Price at posting:
65.5¢ Sentiment: Hold Disclosure: Held
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