Lachlan Star (ASX: LSA) has successfully completed its placement of 10.97 million special warrants at A$1.57 (C$1.60) to a syndicate of underwriters to raise A$17.2 million (C$17.56 million).
The syndicate is led by Macquarie Capital Markets Canada and includes Dundee Securities, GMP Securities and Raymond James.
Each warrant can be exercised into one share.
Lachlan Star plans to use the net proceeds from the offering for the continued development of its producing CMD Gold Mine, where the company recently surpassed its 3 million gold ounce milestone.
The project now hosts an Indicated Resource of 1.79 million gold ounces and an Inferred Resource of 1.34 million gold ounces.
Importantly, the latest increase in the gold Resource positions Lachlan Star closer to its peer group in terms of contained ounces, as well as provides economies of scale and opens up the potential for a longer mine life.
The potential for a larger Resource still is strongly supported by the fact that most of the CMD deposits are still open.
Unhedged gold production on the rise
Lachlan Star currently has unhedged gold production of around 57,500 ounces per annum, which is forecast to increase to 75,000 ounces per annum in the next 12 months.
Interestingly, the company is producing through an underutilised 8 million tonne per annum plant, which is currently operating at 3.9 million tonnes per annum.