Horizon Gold Faces Dilution Risks if Entitlement Offer Falls Short

Capital Raising Details

Horizon Gold Limited (ASX – HRN) has initiated a significant capital raising effort comprising a $7 million non-renounceable pro-rata entitlement offer and a $5 million private placement, both priced at $0.48 per share. Eligible shareholders are invited to subscribe for one new share for every ten shares held as of the record date, 24 July 2025. The entitlement offer opens on 29 July and closes on 12 August 2025.

The private placement, announced concurrently, targets institutional and sophisticated investors and is expected to settle on 29 July 2025. Importantly, placement shares will not be eligible for the entitlement offer, ensuring a clear distinction between the two components of the capital raise.

Use of Proceeds and Strategic Focus

The combined $12 million capital injection is earmarked primarily for advancing the Gum Creek Gold Project, a 100% owned asset pivotal to Horizon Gold’s growth strategy. Approximately $3.66 million will fund the completion of the project’s feasibility study, while $5.54 million is allocated for ongoing exploration and drilling activities aimed at resource expansion and evaluation.

Additionally, $1 million will be directed towards debt repayment, specifically a loan owed to major shareholder Zeta Resources Limited, with the remainder covering general working capital and administrative costs. This allocation underscores the company’s intent to strengthen its balance sheet while progressing project development.

Shareholder Participation and Control Implications

Major shareholder Zeta Resources Limited, holding approximately 74.6% of shares, alongside the company’s directors, have committed to fully participate in the entitlement offer, contributing over $5.5 million. This participation is critical given the offer is not underwritten, providing a degree of confidence in the capital raise’s success.

Should all eligible shareholders participate fully, the issuance of new shares will not alter the control dynamics within the company. However, any shortfall in subscriptions may lead to dilution for non-participating shareholders and potential changes in voting power, with Zeta Resources’ stake potentially decreasing to around 71.3%.

Risks and Regulatory Considerations

The offer document provides a comprehensive overview of risks inherent in mining exploration and development, including tenure renewal uncertainties, reliance on key personnel, operational challenges, commodity price volatility, and environmental and regulatory compliance. Investors are cautioned that the investment is speculative and advised to seek professional advice before participating.

Notably, the entitlement offer excludes shareholders with registered addresses outside Australia, New Zealand, and Bermuda due to regulatory and administrative constraints. The new shares will rank equally with existing shares and are expected to be quoted on the ASX following issuance.

Next Steps for Investors

Eligible shareholders should carefully review the offer document and consider their participation before the closing date. Payment can be made via BPAY® or electronic funds transfer, with detailed instructions provided in the entitlement and acceptance form. The company has appointed Morgans Corporate Limited as lead manager for the offer.

Following the close of the offer, Horizon Gold will announce the results and proceed with the allotment and quotation of new shares, enabling the company to accelerate its development plans for the Gum Creek project.