Papillon Resources: A$16m institutional capital raising highlights West African gold potential

Papillon Resources (ASX: PIR) has accomplished a significant capital raising of $16 million from institutional investors in a challenging market.

The institutional support provides a vote of confidence in Papillon's gold project and its progress at the Fekola project in Mali.

The placement comprises 21 million shares at $0.76 to raise $16 million, boosting the company's cash position to around $27 million.

Alan Campbell, managing director, commented on the strong support from the investment community, and said:

“We are extremely pleased to have institutional investors of this calibre invest in Papillon at this relatively early stage.

"We feel it is a positive reflection of the encouraging results the company has achieved to date. Importantly, the placement will remove short term financing risk at this extremely important stage of Papillon’s development cycle.

"It will also raise the company’s profile among international investors and will provide significant financial support to the company as it rapidly progresses the promising Fekola Gold Project in the next 12 to 18 months.”


Funding allocation

Papillon is now well funded to commence Scoping Studies at the project, as the company moves towards a maiden gold JORC Resource by around mid-2012.

Highlighting the strategic location of the project, it is situated in the Mali West regional gold province, which has more than 22 million ounces of gold within 60 kilometres.

Other projects in the vicinity include Randgold Resource's (LON:RRS) 11.5 million ounce Loulo project and AngloGold Ashanti's (NYSE: AU) 13.1 million ounce Sadiola project.


New gold discoveries

Results from two more diamond results were released this week, with highlights from the first hole including 57 metres at 10.69 grams per tonne (g/t) gold from 177.3 metres; and 16 metres at 2.24g/t gold from 237.3 metres.

A second hole returned 21 metres at 3.58g/t gold from 105.2 metres; 53 metres at 5.07g/t gold from 155.2 metres; and 16 metres at 4.40g/t gold from 212.2 metres.

Originally published at: http://www.proactiveinvestors.com.au/companies/news/24840/papillon-resources-a16m-institutional-capital-raising-highlights-west-african-gold-potential-24840.html