Shares of Australian Gold and Copper Ltd (ASX:AGC) (AGC) hit a new 12-month high on news that the company will welcome a new major shareholder in Hong Kong-based investment company Delin Mining Group Cooperation Ltd, in a deal described as "transformational".
AGC has signed a binding agreement with Delin involving a capital injection of $10.1 million through the subscription of 122,222,222 new shares at $0.082636 each, a significant premium prior to AGC’s share price rally this morning.
The share placement will result in Delin holding a 55% interest in AGC once completed.
A $200,000 deposit has been paid to AGC upon signing of the agreement.
AGC shares have been as much as 66.1% higher this morning to $0.093, a new 12-month high for the explorer.
Funding for exploration
The transaction, which requires shareholder approval, will give AGC the funds to continue its search for gold and copper deposits in the Cobar Basin of New South Wales, which is host to the high-grade CSA copper mine.
A maiden drill program to test the high-priority Hilltop Target (NYSE:TGT) has been approved to commence as soon as the share placement is completed.
Additionally, the cash injection will allow AGC to aggressively explore four other drill-ready South Cobar targets identified at Achilles and Planet.
The funds raised will also be used to advance AGC’s other NSW projects and for general working capital and any other ancillary purpose.
“Transformational” investment
“In the current climate where the cost of capital is high, this investment represents exceptional value for all our shareholders,” AGC chairman David Richardson said.
“The significant premium to market price is clear evidence of the attractiveness of the drill-ready targets in our South Cobar Project.
“We look forward to this transformational strategic investment and welcome Delin as a new major shareholder.”
Bridging a gap
Delin chairman Zhang Yong added: “We are pleased to make this strategic investment in AGC and are excited about AGC’s portfolio of exploration projects.
“We look forward to supporting AGC to further the advancement of these gold projects, and to providing a bridge between the Australian mining industry and Southeast Asia in the future together with AGC.”
Zhang will be appointed to the AGC board as co-chairman as soon as the placement is completed.