Central China Goldfields (LON:GGG) (GGG) has raised £1.125m in an institutional placing, issuing 29.6m shares at 3.8p each. The funds raised, along with the proceeds from the sale of the group's sChinese assets will provide the company with a cash resource over £3m, enough to fast-track the company’s principal asset - the Bullabulling gold project in Western Australia.
The company plans to change its name to GGG Resources PLC to reflect its new emphasis on Bullabulling and after it has transitioned away from its operations in the People’s Republic of China.
The Bullabulling project has already been granted a series of mining leases - thanks to the site’s former mining operations – and along with its 50:50% joint venture partner Auzex Resources (ASX:AZX), the company is now fast-tracking the project to produce a bankable feasibility study (NYSE:BFS).
GGG highlighted that, based on 12,000 historic drill holes, “Bullabulling has the potential to yield large, open pittable gold deposits with high grade lodes”, and the company is currently working on a new drilling programme.
The programme’s first assays are expected in the next few weeks.
According to GGG, it is this potential to become a sizeable gold mine which attracted two new major institutional resource funds, Baker Steel Capital Managers and CQS Asset Management Ltd - the main participants in the latesr fund raising, investing more than £1m.
"It was important strategically that we secure funding from additional blue chip resource investors as we move Bullabulling towards gold production, anticipated to be in early 2013”, GGG Chairman Peter Ruxton commented.“It is therefore with great pleasure that I can now formally welcome both Baker Steel and CQS as new shareholders in this very exciting period for the company."
On completion, Baker Steel Capital Managers will hold 19.8m shares, which represents 8.72% of GGG’s issued share capital.
Additionally, the company’s recently appointed Non-Executive Director, Michael Short, participated in the fund raising with a subscription for 2m placing shares. Four other company directors also bought shares in the placing.
The company also issued placing warrants, with one warrant being issued for every three placing shares issued. The warrants will be exercisable at 6.3p until 19 January 2012.
The new shares will join the AIM market on 23 July.
Bullabulling, located in the Coolgardie Goldfield in Western Australia, was an active mine up to 1998, mining and treating 7.9 Mt (million tonnes) grading 1.45 g/t (grammes per tonne) gold for a total production of 370,000 oz (ounces) of gold.
Earlier this month, the partners hired Cube Consultants, to conduct an engineering scoping study at Bullabulling. The multi-disciplinary review is now underway, looking at all the extensive paper-based mining engineering and metallurgical data at Bullabulling, the site of a former open pit gold mine.
The results of the study, which is expected in September this year, will form the basis for a more detailed feasibility study of the project.
The final output of the study will be to develop various economic scenarios for mining and processing the gold mineralisation at Bullabulling based on a new JORC compliant resource calculated by CSA Global.
The results of both studies will be combined to finalise resource development, processing and mining options prior to the commencement of a feasibility study in Q4.