St George Mining to raise A$1.57m to accelerate exploration at East Laverton

Gold and nickel focused St George Mining (ASX: SGQ) will raise A$1.575 million through a one for five non-renounceable rights issue at $0.15 per share to provide additional funds to fast track exploration at its East Laverton and Pine Creek projects.

There will be attaching three for two free options to new shares acquired under the rights issue at an exercise price of $0.20 each with an expiry date of 28 November 2014.

The company said the capital raising will also increase the free float and liquidity in St George shares, as well as strengthening its balance sheet flexibility.

Lead manager to the program will be BurnVoir Corporate Finance.

John Prineas, St George Mining's executive chairman,  said “the entitlements issue will provide all existing shareholders with an opportunity to acquire additional shares in the company in advance of what we believe will be a highly successful drilling campaign at our East Laverton and Pine Creek projects in the second half of this year.

"The free options attaching to the new shares are a great way to gain a leveraged exposure to the significant upside of our projects.

"We have structured the capital raising program so that it is attractively priced for investors wishing to share in our tremendous exploration potential and to reward the continuing loyalty of our shareholders.”

St George has made substantial progress at its projects over the past year. The company has identified several outstanding gold targets at East Laverton and the company have further refined the existing gold discovery at Pine Creek.

The East Laverton project in the North-Eastern Goldfields region of Western Australia has potential to be a major, new nickel sulphide district.

Drilling of high priority targets, such as the Desert Dragon and Balmoral gold prospects, are scheduled for the third and fourth quarters of 2011. The company believes these targets could host million ounce deposits.

These targets will be the focus of St George's 2011 drilling program with results expected to be released over the next 3-6 months. The company has also entered into a farm-in arrangement with BHP Billiton (ASX: BHP) for the nickel rights at East Laverton.

BHP is sole funding the East Laverton project to a Bankable Feasibility Study.

Use of funds will be divided accordingly; East Laverton exploration $700,000, Pine Creek exploration $300,000, working capital $453,430, expenses of the capital raising $121,570.

Upon full subscription of the rights issue, the number of ordinary shares issued by the company shall increase from 52.5 million to 63 million.

St George currently has no issued options as part of its capital structure. Following issue of the free options under the rights issue, a total of 15.75 million options will be issued by the company assuming full subscription.

Following closing of the rights issue, the company intends to launch an option program whereby all eligible shareholders of the company will be offered the opportunity to purchase one option for every two shares at a price of $0.01 per option. These options will be on the same terms as the free options.

Originally published at: http://www.proactiveinvestors.com.au/companies/news/18333/st-george-mining-to-raise-a157m-to-accelerate-exploration-at-east-laverton-18333.html