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STREET TALK
Tanami Gold launches rights issue
PUBLISHED: 12 HOURS 8 MINUTES AGO | UPDATE: 12 HOURS 8 MINUTES AGO
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Struggling Northern Territory gold junior Tanami Gold has launched a heavily discounted $65.3 million rights issue as it seeks to address its precarious financial situation.

A term sheet for the renounceable rights issue was distributed by Patersons Securities yesterday and showed the company is offering five new shares for every four shares held at an issue price of 20¢ a share – 70 per cent less than the stock’s last traded price of 66.5¢.

Hong Kong investment group Allied Properties Resources, which owns 23.5?per cent of Tanami, has committed to take up its $15.3 million entitlement and a general sub-underwriting position of $30 million. The rights issue bears a striking resemblance in structure and discount to another Patersons executed for a struggling gold junior, Navigator Resources. In that case, it was Au Mining in the role of supportive major shareholder.

Tanami intends to use the funds raised to retire a fully drawn $50.6?million loan with AF Finance, the financing arm of Allied, that is being viewed as an impediment to its progress. Any leftover funds will be used as working capital on the company’s Coyote and Central Tanami gold projects in the Northern Territory.

The Australian Financial Review