set to be largest pure silver play on the asx

Cobar Consolidated to raise equity
Published 6:27?PM,?18?Apr?2011

AAP

Cobar Consolidated Resources Ltd is set to become the largest pure play silver producer on the ASX after announcing a $28 million capital raising.

The silver mining hopeful said its Wonawinta silver project, near Cobar in western NSW, would go into first silver pour by the end of this year.

The mine is Australia's largest undeveloped silver resource and silver prices are at 31-year highs.

The mine has an inferred resource of 51 million ounces of silver, with production forecasts of 2.5 million ounces per annum used to produce dore or silver bars.

The capital raising has already secured $15 million through private placement including fund managers, with a further $13.4 million to come through a 10-for-one ordinary share entitlement offer underwritten by Ord Minnett.

The company's shares leapt up by six cents, or 6.25 per cent to $1.02 on Monday.

Cobar Consolidated managing director Ian Lawrence said he felt in a strong position going into production, now that the company had enough funds.

When it first drilled the area in 2007 it concluded the project would be viable with the then price of silver at $US16/ounce, he said.

On Friday night in New York, silver set an intra-day record of $US42.865.

"Our sentiment a couple of years ago was that the silver price would move and our development strategy has been to get into production as soon as we possibly can to take advantage of that," he told AAP.

"I have no real idea why we thought that, other than being a bit optimistic ... as it turned out the tea leaves have been read pretty well."

The current price rise has been linked to hedging against inflation and rising oil prices.

However, Mr Lawrence said the precious metal's fundamentals were strong, with half of its annual usage on industrial uses such as solar power, which was growing at 20 per cent a year, with new production only up five per cent a year.