Reed Resources (ASX: RDR) has launched a $10 million capital raising which will ensure the company has sufficient working capital as it moves into the commissioning phase at its Meekatharra Gold Project.
The capital raising will comprise an $8 million placement to institutional and sophisticated investors, for which Reed has already received subscription commitments, and an underwritten $2 million share purchase plan to existing shareholders.
Both will have an issue price of $0.18 per share. Azure Capital has lead managed the placement and will underwrite the share purchase plan.
Under the share purchase plan, Reed is offering each eligible shareholder the opportunity to acquire up to a maximum of $15,000 worth of shares.
The offer price of $0.18 represents a 5% discount to Reed's closing price on 16 October 2012, and a 17% discount to the volume-weighted average price of shares during the 20 trading days up to and including 16 October 2012.
Luke Tonkin, managing director, said: "Reed is pleased with the very strong support for the capital raising.
"The additional working capital allows the group to maintain appropriate working capital levels during the commissioning of the Meekatharra Gold Project, which is scheduled for December.
"The Meekatharra Gold Operations mining contractor commenced mobilising to site from 1 October and has commenced 24 hour mining operations.
"The approval of the Batavia Mining Proposal is expected this week which is another key milestone as the company works towards first gold production."
Last month Reed announced it was in the process of finalising a $19 million debt facility with Credit Suisse. The funds raised will augment the company's cash reserves as this facility is finalised and made available.
The Meekatharra Project hosts a 3.6 million ounce resource and 752,000 ounce reserve and covers 1,000 square kilometres over 110 kilometres of strike within the fertile Wydgee Greenstone Belt.
The project comprises six historically significant mining centres and multiple open pit and underground ore sources.
It is located in a region that has produced around 4.5 million ounces of gold and that hosts comprehensive infrastructure and facilities with an estimated replacement value of over A$100 million.
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