Rey Resources (ASX: REY) has received a major vote of confidence from investors with firm commitments for a A$8 million placement, comprising 40 million shares at $0.20.
The placement will be in two tranches, with the first to raise $1.34 million under the company's 15% capacity, with the second $6.66 million subject to shareholder approval.
The capital injection will be used for continued exploration targeting an increase in resources and extension of mine life, along with optimisation studies and permitting.
Kevin Wilson, managing director, said the placement would allow the company to accelerate its growth ambitions.
“We are delighted with the strong level of support for the placement and believe it is a strong endorsement of the Duchess Paradise Project and our strategy to maximise value through further exploration and development.
"As a result of this capital raising, our company is in a healthy financial position to prove the potential of our large land holding, negotiate with potential strategic partners and ultimately demonstrate the substantial upside of the Duchess Paradise Project.”
Rey Resources completed the Definitive Feasibility Study on the development of the Duchess Paradise thermal coal export project last month, confirming the project as economically robust and technically viable.
The study proposed a highwall mining operation producing 2.0 to 2.5 million tonnes of 5,500 kcal/kg thermal coal per year to be exported from the company’s existing port infrastructure at Derby in Western Australia.
Undertaken by Marshall Miller & Associates Inc. the study confirms the prospect of a longer life project and increased economic and employment opportunities for the area.
The study proposes an initial operation with a mine life of at least 10 years, an ungeared NPV (10% discount rate) of A$176 million (after taxes and MRRT), an internal rate of return of 27%, and a payback of 3.4 years.
Production costs are estimated at A$70 per tonne.
Rey Resources is now looking to extend the mine life beyond 10 years through further exploration.