While mining and processing operations at Dalgaranga in Western Australia are on pause, the past two years have delivered the stellar Never Never resource, potential lookalikes below the existing Gilby’s pit, and just this week a new potential lode at Pepper.
Considering Never Never has transformed from a single drillhole just north of the pit to a 952,900 ounces grading 5.74 grams per tonne resource, and that gold prices continue to defy gravity, it’s perhaps unsurprising the company has secured an underwriting commitment for the full amount from Canaccord Genuity, Sternship Advisers and Euroz Hartleys.
The raisings are split between a $47 million institutional placement and a one-for-17 pro rata accelerated non-renounceable entitlement offer to raise $33 million.
The intentions of major shareholders Tembo Capital (17.3%) and Delphi Group (14.3%) are unknown, but Spartan chair Rowan Johnston and non-executive director David Coyne will take up their full entitlements, while fellow director Deanna Carpenter has agreed to sub-underwrite $30,000 of the offer.
Managing director Simon Lawson said the cash injection was a landmark moment for the company, adding to its existing $30 million cash position and supporting its mission to transform from a troubled lower-grade bulk miner to a high-grade underground Murchison operator.
The raisings are priced at 58c, an 11.5% discount to the prior closing price. Spartan last raised $25 million via a 40c placement in November.
The cash will fund renewed plans for a $38 million underground exploration decline to support cheaper drilling of the increasingly deep Never Never resource, Pepper 90m to the south in a separate structure, Four Pillars below the Gilby’s pit, and other lookalike targets in the vicinity.
“Importantly, the underground exploration decline is also likely to provide for an accelerated pathway to re-commence mining at the time of a final investment decision to re-start production,” Lawson said.
Spartan wants to be back in production next year.
Dalgaranga ceased production in late 2022, a victim of abnormally high rainfall, labour shortages, COVID-19 impacts, declining production and increasing costs.
Never Never sits within an area considered sterilised after drilling in 2013 and 2017. It has a 1.6-1.9Moz exploration target.
Lawson has called it “one of the most exciting new gold discoveries seen in Western Australia in recent years” and an entirely new style of mineralisation for the Dalgaranga greenstone belt.
Pepper has a single assay and three additional holes, and it appears to be a separate lode.
In addition to Never Never, there are 739,800oz at 1.45gpt for the Gilbey’s Complex, including Four Pillars and West Winds, and the nearby Plymouth and Sly Fox pits.
All resources are within 2km of the mill, which has a 2.5 million tonne per annum capacity.
Spartan was subject to a $50 million recapitalisation a year ago and has traded between 27-68c over that time.
