Ausgold follows up definitive feasibility study with $35 million capital raising for Katanning gold project

The company behind the $355 million Katanning gold project in the Great Southern has raised $35m the week after releasing a definitive feasibility study that targeted first production by the end of 2027. Ausgold told the Australian Securities Exchange on Thursday it had received binding commitments to issue up to about 61.4 million fully paid ordinary shares at 57¢ per share. The company said the placement was strongly supported, with several highly credentialled offshore and domestic institutional investors introduced to the register. It said the placement was also well supported by several existing shareholders. Ausgold said subject to shareholder approval, non-executive director Paul Weedon had subscribed for $100,000 of new shares and executive chairman John Dorward for $50,000 of new shares. The company said the $35m would be used to accelerate the project — which is at Badgebup, 30km north-east of Katanning — towards a final investment decision. It would also be used to buy freehold land, including land the company has under option; to conduct exploration drilling of high priority near-mine and regional targets; to ensure flexibility for payment of deposits on long lead items; and for general working capital purposes and costs of the placement. The definitive feasibility study estimated average annual gold production of 140,000 ounces in the first four years, with 1.14Moz produced across the life of the mine, which was put at 10 years. The company said the project’s operational workforce would peak at 350 full-time jobs, with up to 250 workers involved during the 18-month construction phase. This latter workforce would be housed in an accommodation facility in Katanning. Ausgold indicated it would make a final investment decision in the middle of next year, with first gold being targeted by the end of 2027. The study estimated a capital development cost of $355m, which could be paid back in 13 months at a $4300/oz gold price. The company said the project’s post-tax cash flow would be $950m, with an internal rate of return of 53 per cent at a gold price of $4300/oz. Post-tax cash flow would increase to $1.36 billion and IRR of 68 per cent at the current spot gold price of $5000/oz. The all-in-sustaining cost would be $2180/oz for the first four years and $2265/oz for the life of the mine. Mr Dorward said the on-time and on-budget successful completion of the definitive feasibility study was a major milestone on the road to Ausgold becoming Australia’s next mid-tier gold producer. “This new capital stands us in good stead to progress works in relation to our next goal of rapidly accelerating the development of the KGP to a final investment decision and continuing to explore our extensive tenement holding,” he said.