Otago gold explorer and boutique producer Glass Earth Gold has completed a $C2.73 million ($NZ3.9 million) capital-raising programme from a private placement to fund further exploration.
Toronto-listed Glass Earth, which has spent about $25 million in exploration, predominantly around Otago during the past three years, had raised more than $2 million of the latest placement by early May and the last tranche of funding has been secured, chief executive Simon Henderson said in a statement yesterday.
"This year, so far, has been very gratifying. We have been operating our placer gold mining site at McAdies [Ida Valley, Otago] since December 2009, from which gold sales are offsetting our general and administrative expenses, for the most part," Mr Henderson said.
Since beginning mining at McAdies, Glass Earth has reported "modest" gold recoveries, but has not released detailed information on quantities of gold, sales, or the quality of ore bodies.
The company has entered into several small gold-producing ventures around Otago during the past year in order to boost cash flow.
Its cash-in-hand had fallen below $1 million in November last year for the first time since dual listing on the mining-friendly Toronto and New Zealand bourses in October 2006.
Shares in Glass Earth hit an April high of 42c, but since then have traded at around the 30c mark on small volumes.
Craigs Investment partner broker Peter McIntyre said while the capital-raising appeared to have gone smoothly, the issuance of more shares meant there was potential for an increased dilution effect on the share price.
Also announced yesterday, was a $100,000 interest-free loan made to Glass Earth by an unidentified "arm's-length lender" which must be repaid by September. In lieu of interest, the lender will be issued 100,000 common shares.
Mr McIntyre said the arrangement was "unusual".
"Glass Earth may want that shareholder on its register [by issuing shares]. They could be looked on later as a further source for more investment," he said.
The $4.2 million would be used for exploration drilling at one site in Te Puke in the North Island and four others in Central Otago, including a hard-rock target in Ophir.
To create cash flow it is processing ore, recovering modest amounts of gold from its McAdies prospect at its Ida Valley permit.
Results from bulk testing at Ophir had been sent to a Canadian company to determine recovery rates.
In mid-March, Glass Earth partnered with Placer Gold International Corp, the pair holding permits for adjacent prospects in the Manuherikia Valley, near Alexandra.
Placer Gold is expected to fund initial development costs up to $250,000, for a 30% stake in the targets, and has an option to put $500,000 in for plant and equipment to gain a total 50% stake.
• In early December, Glass Earth posted a third-quarter loss of $218,000, leaving working capital of $934,000. A month earlier, it completed a Canadian private placement, raising $640,000.
In the previous year to December 2008, Glass Earth spent $4.1 million on exploration and booked a $1.3 million loss, a year earlier recording a $2.68 million loss.
