Savannah Raises $14 Million at 1.5c to Fund Gold Mining Restart
Savannah Goldfields Limited has launched a $14 million capital raising to fund the restart of gold mining operations at its Agate Creek and Georgetown projects, backed by cornerstone investors including Wes Maas.
- Capital raising program targets $14 million through placements, entitlement offer, and convertible notes
- Cornerstone investor Wes Maas commits approximately $7 million, gaining near 20% stake
- Funds allocated to mining restart, exploration, environmental assurances, and debt repayment
- Equity raising fully underwritten by Morgans Corporate Limited
- Convertible notes maturity extended and conversion price reduced, subject to approvals
Capital Raising Overview
Savannah Goldfields Limited (ASX:SVG) has announced a comprehensive capital raising program designed to inject up to $14 million into the company. This initiative aims to strengthen the balance sheet and finance the recommencement of gold mining and processing activities at its key assets, Agate Creek and Georgetown, located in Queensland.
The program is structured around several components: an initial fully underwritten placement raising approximately $1.19 million, a fully underwritten pro-rata accelerated non-renounceable entitlement offer targeting $4.2 million, a conditional placement subject to shareholder approval for $4.5 million, and a convertible note placement also subject to approvals, expected to raise $4.3 million.
Strategic Cornerstone Investment
A significant highlight is the involvement of Wes Maas, founder and CEO of Maas Group Holdings Ltd (ASX:MGH), who has committed to invest around $7 million across the various components of the raising. Post-completion, Maas is anticipated to hold a 19.9% stake in Savannah, positioning him as a major shareholder and strategic partner. This endorsement from a seasoned entrepreneur with deep mining and infrastructure sector experience lends considerable credibility to Savannah’s growth plans.
Additionally, Savannah’s Chairman Stephen Bizzell and other directors have demonstrated confidence by committing to their entitlements and conditional placements, collectively contributing over $2.6 million.
Use of Proceeds and Operational Outlook
The capital raised will be deployed to fund critical activities including planning and preparation for the restart of mining and processing operations, working capital needs, environmental compliance assurances, exploration and resource drilling programs, creditor payments, and partial repayment of short-term borrowings. This comprehensive use of funds underscores Savannah’s commitment to operational sustainability and growth.
The restart of operations at Agate Creek and Georgetown is a pivotal step for Savannah, potentially unlocking significant value as gold prices remain robust. The company’s focus on resource definition and exploration drilling also signals an ambition to expand its resource base beyond current estimates.
Convertible Notes and Shareholder Approvals
Part of the capital raising involves issuing 15.3 million convertible notes at 28 cents each, subject to shareholder and noteholder approvals. Savannah plans to amend the terms of existing convertible notes by extending their maturity to December 2026 and reducing the conversion price to 4 cents, effectively increasing the number of shares convertible per note. These changes aim to provide financial flexibility and align investor interests with the company’s growth trajectory.
Shareholder approval will also be sought for the conditional placement and expanded conditional placement, which are not underwritten. The company has outlined a clear timetable for the capital raising process, with key dates extending through to mid-March 2025.
Market Implications and Next Steps
The equity raising price of 1.5 cents per share represents a discount to recent trading prices, reflecting the need to incentivize participation and ensure full subscription. Morgans Corporate Limited acts as lead manager and underwriter for the placement and entitlement offer, providing a degree of certainty to the process.
Investors will be watching closely how the market responds to this capital injection and the progress of mining restarts. The involvement of high-profile investors and management’s alignment through share subscriptions may bolster confidence, but execution risks remain, particularly around operational ramp-up and environmental approvals.
Bottom Line?
Savannah’s $14 million capital raise sets the stage for a critical operational restart, but shareholder approvals and execution will be key to unlocking value.
Questions in the middle?
- Will shareholder approvals for the conditional placement and convertible note amendments be secured smoothly?
- How quickly can Savannah ramp up mining and processing operations at Agate Creek and Georgetown?
- What impact will the capital raising have on Savannah’s share price and investor sentiment in the near term?