Golden Dragon Mining (ASX:GDR) has entered a subscription agreement with Chengtun Gold (Hong Kong) for the issue of 11 million shares at $0.20 each, raising $2.2 million.
The placement will give Chengtun Gold a 19.89% interest in Golden Dragon upon completion. The issue price represents a 17.65% premium to Golden Dragon’s closing price of $0.17 on 24 July and a 15.66% premium to its five-day volume-weighted average price of $0.173.
Chengtun Gold is a wholly owned subsidiary of Shanghai-listed Chengtun Mining Group (SSE:600711), which operates mining and refining facilities for copper, cobalt, and nickel in China and Africa. The group has identified gold and other precious metals as a focus for future growth.
Completion remains conditional on Chengtun Gold obtaining any government or regulatory approvals required for the investment.
Chengtun Gold will be entitled to nominate one director to Golden Dragon’s board while maintaining a shareholding of at least 15%. It has also agreed to a two-year standstill preventing further acquisitions without board approval, except under specified circumstances.
If a government agency or applicable law compels Chengtun Gold to divest some or all of its subscription shares within 200 business days of allotment, the investor may require Golden Dragon to repurchase the affected shares, or arrange a third-party purchase, at $0.20 each.
Golden Dragon says it plans to use the proceeds to accelerate exploration at its Cue Gold Project in Western Australia, focusing on follow-up and extensional drilling at the Coodardy prospect and Behring Bore. An aircore program is scheduled for August, while funding will also support work at Jeffrey Well and targets within tenement E20/1072.
Managing Director Simon Buswell-Smith says the investment provides strategic value beyond the funding.
“We see significant strategic value in partnering with a group that brings deep technical expertise, operational experience and access to international networks across the mining value chain,” Buswell-Smith says.
Chengtun Mining Group Chairman Bo Xiong says the investment aligns with the group’s plans to expand into gold and precious metals.
“We see a compelling value proposition in its portfolio and a clear pathway to resource growth,” Xiong says.
Settlement and the issue of shares are expected on 31 July.
Write to France Pinzon at Mining.com.au
Images: Golden Dragon Mining
