Red 5 aims to raise up to US$47,420,802 through a non-renounceable, pro-rata entitlements offer to eligible shareholders. Company officials hope the funds raised will lead to the company recommencing mining operations and gold production at the Siana project.
“Given the challenging environment for equity markets and the consequent offer discount being offered to shareholders,” according to a company statement, “the Board considers that the appropriate course of action is to offer this opportunity to our supportive shareholder base in order to provide the necessary cash to repay an outstanding US$25 million prepaid swap facility and implement tailings storage solutions which will lead to the recommencement of operations and production at the Siana mine.”
Managing director Steve Norregaard adds, “After the operator and contractor changes of earlier this year we have a quality asset in need of additional capital. Despite recent market fluctuations, Siana’s fundamentals as a lowest quartile cost gold mine make it a very attractive asset. Returning to production is the best way to realize this value.”
After extensive analysis of available tailing storage solutions for the Siana mine, Red 5 officials say the company’s focus has turned to the construction of a small interim lined storage pond constructed downstream from the existing tailings dam, which would provide tailings capacity for up to four months followed by a thickening and filtering system to create a cemented past product which mixed with waste rock will provide a stable tailings and waste land form.
The company officials say this co-deposition storage method is able to accommodate a minimum 18 months of tailings storage prior to the ultimate completion of a new purpose-built facility. This combination of deposition methods would potentially see the processing plant recommence operations by October 2013.