Australian gold producer Red 5 (ASX:RED) has received commitments from eligible shareholders to raise $18.84 million in a share purchase plan (SPP) to support operations at the King of the Hills Gold Project in Western Australia.
The company reports the SPP has closed ‘substantially’ oversubscribed, raising more than the proposed amount of $10 million, which was fully underwritten.
Under the terms of the SPP, eligible shareholders were entitled to purchase up to $30,000 worth of shares at the subscription price of $0.135 per share, which was the same price as the share placement announced on 21 February 2023. The SPP closed on 4 April 2023.
This is the second SPP Red 5 has undertaken in the last 12 months, and Red 5 says the issue price of the SPP shares was a discount of about 24.6% to the volume weighted average market price (VWAP) over the last 5 days preceding the announcement of the SPP. The company reports the issue of shares under the SPP is subject to shareholder approval at a general meeting to be held today (12 April).
The maximum amount proposed to be raised under the SPP was $10 million, and as a result, Red 5 reports shareholder approval is to be sought to issue a maximum of over 74.074 million shares at $0.135 per share.
The maximum amount proposed to be raised under the SPP was $10 million
The company says the ‘strong’ demand received for the SPP has necessitated a scale-back of valid applications in accordance with the terms of the SPP booklet. Scale-back measures will include not accepting applications received from ineligible shareholders and multiple applications received from holders with the same name, along with scaling back applications for the current SPP and the SPP conducted in October 2022 to not exceed $30,000.
Other measures will include not allocating shares to applications from shareholders with an existing shareholding of 500 shares or less at the record date, accepting applications received for parcels of $1,000 and $2,000 in full, and scaling back applications received for parcels of $5,000 or above on a pro-rata basis to about 59.46% of the amount applied for.
Red 5 reports refunds are to be made through the scale-back process being replaced by electronic funds transfer (EFT) from 26 April 2023. To expedite this process, the company is urging shareholders to update or provide their bank account details to Automic on its website.
The company says the final SPP outcome will result in the issue of a total of over 74.074 million shares for gross proceeds of $10 million. Subject to shareholder approval, Red 5 reports the SPP shares will be issued on 13 April 2023, and holding statements in respect of the SPP shares is also expected to be dispatched to shareholders on the same date.
Red 5 is an Australian gold producer currently focused on the King of the Hill Gold Mine and Processing Hub, as well as the Darlot Satellite Gold Mine located in the Eastern Goldfields of Western Australia.
Images: Red 5 Limited
