The Anglo Australian Resources NL (ASX: AAR) share price has fallen sharply today on news the company is capital raising. Anglo announced it was raising $14 million in a placement and share purchase plan (SPP). The Anglo share price is currently trading 5.41% lower at 18 cents.
Anglo is an exploration company with interests in projects targeting gold and base metals, primarily copper and zinc. The company portfolio includes advanced and grass roots projects in Western Australia's Eastern Goldfields, Kimberly and the Northern Territory.
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Capital raising
Anglo's share price fell today after the company said it had secured firm commitments to raise $11 million via a single tranche share placement. The placement comprises approximately 64.7 million shares issued at 17 cents per share to sophisticated and professional investors.
In addition, Anglo is undertaking a SPP to raise up to $3 million. The SPP will be open to all eligible shareholders at the same issue price as the placement.
The company will use existing cash reserves and proceeds of the capital raising to advance exploration, drilling and feasibility studies at the company's Mandilla Gold Project. Mandilla is located 60km south of Kalgoorlie, Western Australia.
Anglo managing director Marc Ducler said:
The proceeds of this placement and SPP will provide an outstanding platform for Anglo to unlock the full value of the Mandilla Gold Project through an extensive exploration and resource definition drilling program, which will underpin the delivery of a maiden Mineral Resource Estimate during the December 2020 quarter as well as the commencement of technical and feasibility studies.
What now for the Anglo share price?
Funds used to complete the current drilling program at Mandilla as well as exploration, drilling and feasibility studies should realise positive gold finds for shareholders, according to the company.
The Anglo share price has had a positive year buoyed by the record rise in the price of gold. Since the start of the year the Anglo share price is up 95%.
