Southern Gold Ltd has withdrawn its previously announced $A10 million placement and made a new offer to cornerstone investor Metal Tiger PLC and others.
The company said the decision was made after considering how the coronavirus pandemic and other economic developments have profoundly impacted the share market and broader business conditions, particularly in the past week.
Southern Gold has now received binding commitments from investors in respect of a placement of 40 million shares in the company at 10 cents per share to raise A$4 million. The placement is at a 16 per cent discount to the 15-day VWAP and will be completed in two tranches.
The first tranche of A$2.168 million is to be completed immediately. The balance of the Metal Tiger investment (A$1.7 million) and directors’ subscriptions (A$0.13 million) in the second tranche (A$1.83 million in total) is subject to shareholder approval.
Southern Gold Managing Director Simon Mitchell said, “We are in unprecedented markets – perhaps a 1 in 100-year event – and this has clearly had an impact on our ability to execute the original equity raising. However, it is times like these that good supportive major shareholders, a solid new cornerstone investor such as Metal Tiger PLC and the backing of an excellent broker in Ashanti Capital, have all contributed to pulling together $4 million in the most difficult of markets. While we will be prudent with expenditure going forward, the raising enables Southern Gold to continue to maintain momentum in our field programmes and drilling, perhaps the most critical factor in a junior explorer’s ability to survive downturns."
Metal Tiger has strongly supported the equity raising and has subscribed for 22 million shares for A$2.2 million. As part of the original subscription agreement, Metal Tiger retains the right to nominate one director to Southern Gold for so long as it holds an interest in the company of at least 10 per cent.