The placement was conducted mainly to existing investors at a 10% discount to the 30 day VWAP and conducted under the company's 15% capacity. Patersons Securities acted as Lead Manager.
Millennium said that the new funds establish a working capital provision more suited to the rapid ramp up to full production at the Nullagine Gold Mine in the East Pilbara District of Western Australia, and will also facilitate an accelerated exploration program.
Earlier in the month Millennium commenced full production of around 6,000 gold ounces per month generating over $10 million in gross revenue per month - based on the current gold price.
The full production milestone marks completion of a very successful construction and commissioning phase and establishes a solid foundation for the 2013 financial year.
Working capital buffer
Millennium will allocate around $6 million to a working capital buffer better aligned with the rapid lift to full production.
Reducing the ramp up period to six weeks from the budgeted twelve to fourteen weeks requires a more rapid build‐up in pit material movement, reagent stocks, fuel stocks, maintenance spares and consumables under a more extended ramp up phase.
The short term increase in working capital requirement will ultimately be off‐set by the higher revenue generated by achieving full production earlier and establishes a sound basis for the 2013 financial year.
$10 million exploration program
Millennium will use the remainder of the proceeds from the capital raising to the exploration and development group to mobilise equipment and personnel to make an early start on the $10 million drilling and exploration program mapped out for 2013.
Nullagine currently hosts 1.33 million ounce gold resource and a 741,000 ounce Ore Reserve contained within 7 deposits on granted mining leases, with Golden Eagle containing close to two-thirds of the resource inventory.
Resource and reserve drilling next year will be centred on Golden Eagle, the central pits such as Shearers, and the far eastern deposits such as Golden Gate.
Extensive mapping during 2012 in and around these locations has yielded numerous new gold exploration targets that will also be followed up to unlock the considerable geological potential of the Nullagine Goldfield.
The program for 2013 will also include the start of exploration on the Golden Eagle southwest corridor, which includes the joint venture with the Creasy Group where Millennium is earning a 70% interest in the gold rights.
Millennium's successful ramp-up to full production of around 6000 gold ounces per month is generating around $10 million in gross revenue, based on the current gold price of US$1730 - with C1 cash costs less than half this amount at between $760 and $800 per ounce.
Proactive Investors could see Millennium pushing towards 100,000 ounces in the medium term, which could further increase the projects forecast EBITDA of $773 million and a IRR of 40%.
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