Underwriting Risks Loom as Flynn Gold Launches Dilutive Rights Issue

Rights Issue Details and Underwriting

Flynn Gold Limited (ASX – FG1) has launched a renounceable pro-rata rights issue, offering existing shareholders one new fully paid ordinary share for every three shares held, priced at 2.3 cents per share. The offer includes free-attaching options, with one option granted for every two new shares subscribed, exercisable at 4 cents and expiring 30 months after issue.

The rights issue aims to raise up to approximately $3 million before costs and is partially underwritten by Mahe Capital Pty Ltd for $1.5 million. Notably, Flynn Gold’s major shareholder, Colin Bourke, has agreed to sub-underwrite $500,000 of this amount, underscoring his ongoing commitment to the company’s exploration strategy.

Use of Funds and Exploration Focus

Funds raised will primarily support ongoing and planned drilling activities at Flynn Gold’s key Tasmanian projects. These include the flagship Golden Ridge project, where recent high-grade gold vein discoveries have generated significant interest, as well as drilling at the Mangana project beneath the historic Golden Entrance gold mine, and at the Henty project targeting silver-lead and zinc-lead-silver prospects.

Additional funds will cover other Tasmanian project costs, general working capital, and the expenses associated with the rights issue itself. The company currently holds approximately $580,000 in cash, and the capital raise will bolster its financial position to advance exploration and pre-development activities.

Shareholder Participation and Dilution Risks

Eligible shareholders with registered addresses in Australia or New Zealand as of the record date (16 September 2025) may participate. The rights issue is renounceable, allowing shareholders to trade their entitlements on the ASX between 15 and 26 September 2025. Shareholders who do not take up their entitlements risk dilution of their holdings.

The issue of new shares will increase the total shares on issue by up to 25%, depending on subscription levels. However, the company notes that if all shareholders take up their entitlements, control dilution will be minimal. The underwriting arrangement also means that if shareholders do not fully subscribe, the underwriter and sub-underwriter may increase their stakes, potentially impacting shareholding structure.

Risks and Market Considerations

Flynn Gold’s prospectus highlights several risks inherent to the offer and the company’s operations. These include the possibility of termination of the underwriting agreement under certain market or regulatory conditions, share price volatility, liquidity risks, and dilution. There is also no guarantee that the options will be exercised, especially if the share price remains below the 4-cent exercise price.

Exploration risks are significant given the speculative nature of mining ventures, with uncertainties around discovery, tenement compliance, environmental regulations, and access. Broader market and economic factors, including commodity price fluctuations and geopolitical events, may also influence the company’s prospects and share price performance.

Next Steps for Shareholders

The offer closes at 5 – 00pm Melbourne time on 3 October 2025, with new shares and options expected to be issued by 10 October 2025. Shareholders are encouraged to carefully review the prospectus and consider their options, including taking up entitlements, trading them, or applying for additional shares from any shortfall. The company has provided detailed instructions and support for shareholders to participate.

Flynn Gold’s board, led by Non-Executive Chair Clive Duncan, has expressed confidence that this capital raising will support the company’s exploration ambitions and value creation journey. The rights issue represents a critical funding milestone as Flynn Gold seeks to advance its Tasmanian projects toward potential resource development.