Major shareholder Delphi Balaton (22%) has agreed to back a non-renounceable entitlement offer to raise $A6 million, underwriting the 0.6:1 raising to keep the company afloat and capable of pursuing development of its sole asset, the Woodlark gold project in Milne Bay Province.

 

The cash will not only fund further studies into the development, but exploration and advancing the village relocation program as the company dreams of starting open pit mining some day in the future.

 

Petra Capital is acting as lead manager to the offer that is priced at 2c, a 23% discount to its last close price.

 

It comes at the tail end of a terrible three years for Geopacific, as both funding and the development timetable for Woodlark were detonated, and its shares have plunged from 60c to a fraction of that. 

 

This week Geopacific announced a $55-65 million non-cash impairment to the value of its 1.5 million ounce Woodlark gold project.

 

Development of the project was stopped 12 months ago as costs and delays started to bite.

 

At sanction, Woodlark was once expected to cost $255 million, ramping up to 100,000ozpa over a decade at average all-in sustaining costs of $1239/oz.

 

If it had been able to meet its original schedule Geopacific could now be reaping the fat margins in a near-$3000/oz gold price environment.

 

Instead, the company started the year with $5 million, and has burnt through about $3 million over the past quarter.

 

It hopes to start a new prefeasibility study later this year.

 

Geopacific shares closed down 4% at 2.6c, valuing it at $13.5 million at the time of the announcement.

 

The stock has traded at 1.5-21c over the past year.