There’s gold for gold in the ASX if you have an attractive offer to pitch, as we saw this week.
Just as the much larger Commonwealth Bank $6 billion share buyback was heavily sought by investors, so too was the smaller offering by Navarre Minerals which was looking for money to allow it to move to buy a producing gold mine from Evolution Mining.
Navarre Minerals was looking to raise $40 million to buy Evolution Mining’s Mt Carlton gold mine in North Queensland and a nearby prospect called Crush Creek.
Investors flocked to the offer with a total of 490,134,605 ordinary shares to be issued to institutional and sophisticated investors at 7.5 cents which will bring in $36.8 million.
A further 176,565,396 shares, valued at $13.2 million, will be issued to Evolution for the rest of the upfront consideration of the transaction.
That’s 12.9% of Navarre’s capital, down from the maximum of 20% indicated before the offer, underlining just how high demand was for the issue.
Navarre will use the money to fund the upfront cash portion of consideration and associated transaction costs. Depending on returns the deal will cost Navarre a minimum of $65 million to a maximum of $90 million if the gold price booms in the next couple of years.
The shares to be issued are expected to settle on November 18 and be allocated to begin trading on the ASX on November 19.
Navarre said in the statement “The Placement was oversubscribed with strong support received from both new and existing investors reflecting the transformative nature of the transaction that immediately elevates Navarre to Australian gold producer status, as well as the outstanding potential across Navarre’s premier exploration assets across Victoria and Queensland.”
Navarre CEO Ian Holland said in the statement on Thursday:
“We appreciate Evolution’s strong equity commitment, reflecting their endorsement of the longer-term potential of the Mt Carlton Operations,” Mr Holland said.
“This funding for the transformational Mt Carlton acquisition is a logical step to grow the company, maximise shareholder return and scale our presence in the Australian mining industry.”
Shares in Navarre fell 7.6% yesterday to close at 8.5 cents, giving those who took the shares in the placement a nice little turn.
