announcement, page-23

More capital raising??? see bold print!

Monarch suffers after capital raising

Kate Haycock
Friday, 15 February 2008

MONARCH Gold copped a battering this morning on the share market after it raised $10 million, despite earlier this month announcing it needed some $35 million to finalise the purchase of the Mt Magnet gold project.



Monarch's Davyhurst mill

After emerging from a nine-day trading halt, the company's shares dropped as low as 49c this morning, a fall of 16c or almost 25%.

The $10 million raising was completed via the issue of 20 million shares at 50c per share and the company said today the funds would go towards boosting production at its Davyhurst gold project.

Earlier this month Monarch chairman Michael Kiernan, however, said the company needed to raise $35 million to meet the conditions of the purchase of the Mt Magnet gold project from Harmony Gold.

Monarch's cash balance was at $1.45 million at the end of the December quarter.

In Monarch's statement today Kiernan said the $10 million would be used immediately to develop the Riverina and Mt Ida prospects.

He did not say if the company still needed to secure the $35 million needed for the Mt Magnet acquisition.

Late last year, Monarch hit a speed bump in bringing the Davyhurst project online after the Walhalla pit "underperformed" and the company was forced to re-jig its mining plan for the operation to bring in ore from multiple pits.

During the December quarter, Davyhurst produced around 7259oz of gold over the three months, down on the company's planned output of producing 6500-10,000oz per month.

The company has said it hoped to bring production to around 150,000oz per annum from the Davyhurst operations and plans to bring a further 150,000ozpa into production from the Hill 50 mine – part of the Mt Magnet project – by the second half of 2009.

MiningNews.net was unable to reach Kiernan this morning for comment.