Alkane Resources (ASX: ALK) will place a shortfall of about 4.5 million shares from its recent A$30 million 1 for 10 non-renounceable entitlement offer with Gandel Metals.
The company offered around 26.9 million shares at $1.10 per share to raise about $30 million, of which $12.2 million was underwritten by Regal Funds Management.
Regal appointed Gandel Metals as trustee for the Gandel Metals Trust, an investment company associated with Alkane director Ian Gandel, to sub-underwrite its obligations.
The entitlement offer forms part of a broader $107 million capital raising to fund the construction and commissioning of the Tomingley Gold Project and the continuing development of the Dubbo Zirconia Project.
Alkane is also undertaking two placements to professional and sophisticated investors to raise $44 million through the issue of 40.3 million shares at $1.10 each, and $33 million through the issue of 30 million shares at $1.10 each.
Importantly, Alkane has full investor backing through firm commitments for the total $77 million in placements which were substantially oversubscribed.
Over the next two years, Alkane is planning to develop two significant resource projects in central west New South Wales which will have a combined capital expenditure of about $1 billion.
The company could be in production at Tomingley by as early as mid-next year once it begins the 12 month construction phase.
A Definitive Feasibility Study for the project delivered production of 50,000 to 60,000 ounces of gold a year for an initial 7.5 years, and based on a gold price of A$1,700 per ounce the project should generate cash flow (EBITDA) of around A$250 million with an internal rate of return of 32%.
Meanwhile, at the Dubbo Project, Alkane is in the process of completing a revised 1 million tonne per annum project financial assessment.
An earlier Feasibility Study estimated earnings before interest taxes, depreciation and amortisation of $6 billion and a net present value of $1.2 billion.
Late last year Alkane delivered an ore reserve upgrade to the project that will support a 36 year mine life from a proposed 1 million tonnes per annum production parameter.
The project is already positioned to be a long term supplier of zirconium and heavy rare earth products when it begins production in 2014.