Tolu Minerals Ltd (ASX:TOK) has raised $8.8 million in a strongly supported placement with funds to significantly accelerate work programs at its Papua New Guinea gold projects and particularly at Tolukuma Gold Mine where it is seeking to grow resources ahead of a proposed restart.
Strong demand was received during the capital raising from existing and new institutional shareholders, located domestically and offshore.
The issue price of A$0.50 per share represents a discount of approximately 13% to Tolu Minerals’ last traded price on April 16, 2024, of A$0.575 per share and a discount of approximately 13.5% to the 5-day volume weighted average price (VWAP) of A$0.578 per share.
“Very pleasing outcome”
Tolu Minerals managing director & chief executive officer Iain Macpherson said: "This is a very pleasing outcome and is strong confirmation that Tolu’s strategy of leveraging the existing infrastructure of the historical Tolukuma Gold Mine to grow and develop a very substantial resource, resonates with our shareholders and the market.
"I am particularly pleased with the ongoing support of existing shareholders coupled with new investments from a number of leading global institutional gold funds.”
Director participation
Demonstrating their confidence in the company and its gold strategy, Macpherson and non-executive director Larry Andagali have provided firm commitments of A$200,000 and about A$250,000 respectively in the placement that will be subject to shareholders’ approval.
Approximately 16.7 million new shares will be issued to sophisticated, professional and institutional investors utilising the company’s available Listing Rule 7.1 capacity.
Around 900,000 new shares will also be issued subject to shareholder approval at a Tolu Minerals general meeting to be held on or around June 18, 2024.
Concurrent sell-down
Following strong demand in the placement, two Tolu Minerals seed investors have agreed to sell around 4.6 million Tolu shares at the same price as the placement, by way of special crossing.
Argonaut Securities Pty Limited acted as lead manager to the placement and sell-down aided by Martin Place Securities and Amvest Capital.
Use of funds
The proceeds will be utilised to allow increased focus for Tolu on more effective and earlier delivery of a work program centred on regional and on mine exploration and supporting activities, working capital requirements and the cost of the offer.
Costs related to exploration and exploration support account for more than 65% of the expedited work program.
Survey planned
Specifically, the funds enable Tolu to complete an Airborne Magneto Telluric survey earlier than previously planned with the survey expected to enhance target generation and drive further exploration across Tolu’s tenement package.
Tolu’s holistic work program consists of a substantial brownfield and greenfield exploration program, including brownfield mineral resource development leveraging an operational restart of the mine, with subsequent project studies and implementation.
This includes a number of on and off-site infrastructure development projects that support the exploration program and the mine.
“An invaluable tool”
"The placement will enable Tolu to build on the significant advances made since the IPO in November last year and accelerate project exploration and development works.
“Tolu will now undertake an Airborne Magneto Telluric survey over Tolu’s entire exploration footprint.
"I believe that the survey will be an invaluable tool to enhance future exploration by utilising world-leading technology to identify structures and mineralised zones to depths in excess of 1,000 metres below surface.
"The survey will be undertaken in the coming months and I look forward to updating the market early in Q4 this year with the outcomes of this work."This survey work was instrumental in the value creation path of fellow PNG gold company K92, which we aim to emulate."
Work program
The company's overall work program is split into a number of distinct work streams:
Operational restart
- Complete Environmental Baseline assessment.
- Refurbishment of infrastructure required for exploration.
- Execution of studies and workplans including plant, power, dewatering, mobile fleet, TSF, etc.
On mine resource development
- Underground diamond drilling, 6,000-metre program targeting resource increase at Gulbadi Red, Mystery & Zine.
- Strike development of the Fundoot ore body.
- Underground sampling and assay.
Early workstreams
- Bakoiudu to Tolukuma access road.
- Access roads to the Hydro Power station.
- Refurbishment of the Hydro power station.
- Access road to the 1300 mRL portal.
Regional exploration and resource development
- Airborne Magneto Telluric (MT) Survey over Tolu tenements including Mt Penck.
- Maiden Taula drill campaign.
- Tolukuma regional exploration following the MT survey.
- Mt Penck regional exploration following the MT survey.