5 Oct 2010

Gold mine company seeks expansion funding

1:15 pm on 5 October 2010

Oceana Gold is looking to raise $115.5 million to extend the life of its New Zealand mines and help fund its project in the Philippines.

The gold producer's shares have been placed on a trading halt while it completes the capital raising.

Oceana Gold operates the Macraes and Reefton gold mines in New Zealand, and earlier this year found new reserves of gold at its Frasers Underground mine in Otago.

The company has entered an agreement with a syndicate of Canadian underwriters to raise capital and is offering special warrants at a 9% discount to the stock's trading price on the Toronto Stock Exchange.

Each special warrant entitles the buyer to one Toronto-listed share.

The Australian-based company says it needs extra funding to extend the life of its New Zealand mines and to help fund development of its gold and copper projects in the Philippines.

In a trading update, Oceana Gold reiterated it expects to produce between 270,000 and 290,000 ounces this year.

The company says an increase in costs due to the stronger New Zealand dollar will be more than offset by a recent increase in the gold price.