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- Wiluna Mining Corporation (WMC) is set to become one of the ASX’s most prolific mining opportunities after tapping investors for up to $84.5 million through an entitlement offer
- The company is already producing gold from its namesake mine in WA’s prolific Northern Goldfields region, and Wiluna plans to use the funding boost to reach profitability
- Following the completion of the entitlement offer, Wiluna will be fully funded to increase production to 120,000 ounces of gold per year before the end of 2022
- This means Wiluna will be generating positive cash flow for the ten-year mine life of its Wiluna Gold Operation even as it examines further growth opportunities through exploration
- With over $50 million already committed under the entitlement offer, this could be the last opportunity to invest in one of the best-positioned gold plays on the market
Junior gold producer Wiluna Mining Corporation (WMC) is set to become one of the ASX’s most prolific mining opportunities after tapping investors for up to $84.5 million through a one-for-one entitlement offer.
The company already owns around 1600 square kilometres of prime real estate in Western Australia’s Northern Goldfields, and Wiluna’s namesake gold mine is the eighth largest in the country.
Wiluna produced over 51,000 ounces of gold from its underground mine over the 2021 financial year and now plans to bolster production to 120,000 ounces a year before the end of 2022 with the help of its upcoming funding boost.
According to Executive Chairman Milan Jerkovic, this will bring the company to profitability for the 10-year mine life of the Wiluna Gold Operation
“The key reason for raising the money is to completely ramp up to commercial production in the next six months to 120,000 ounces a year and start generating positive cash flow for the next ten years with the reserve base we have,” Mr Jerkovic said.
Wiluna has already invested $231 million into its Western Australian mining operation over the past 21 months and has a Pro-forma market cap of $134.5 million.
The capital raise
Wiluna is seeking between $50 million and $84.5 million through its entitlement offer, under which new shares are priced at 40 cents.
This represents a discount of around 29 per cent to the company’s last closing share price of 56.5 cents and of 42.4 per cent to Wiluna’s 10-day volume-weighted average price prior to the launch of the offer.
What’s more, investors will receive one new option for every share subscribed for under the offer, exercisable at 60 cents before the end of 2024.
“Anybody that participates now is getting a very good entry into a producing, profitable mine in the next 6 months,” Mr Jerkovic said.
“We’re also looking to continue with our large exploration story.”
This means Wiluna offers multi-pronged benefits to investors, who are gaining exposure to not only a producing and profitable mine but also a growth opportunity thanks to the exploration potential of the company’s 5.5-million-ounce WA resource.
“Beyond that, we have very extensive ground holdings that potentially host nickel and lithium, just north of the Liontown deposit and north of Honeymoon Well.”
A critical moment for investors
Wiluna has faced some delays over recent months on the back of labour shortages in Western Australia, global supply constraints, and port issues relating to the Russia-Ukraine war.
However, for investors, this simply means there is more time to get on board and become part of the Wiluna story before the company moves into its next phase of life as a profitable gold producer.
Wiluna has already received commitments under the entitlement offer for over its minimum of $50 million, and its underground contractor, Byrnecut, has agreed to convert $13.4 million of receivables from Wiluna into any shortfall from the offer.
So, once the entitlement offer closes on Friday, June 10, Wiluna will be fully funded to ramp up its gold production and reach positive cash flow before the end of the year.
The company presents a limited opportunity for investors to get on board before a market re-rating.
Wiluna is already producing gold from its huge chunk of land in one of the world’s most prolific mining regions, and its upcoming funding boost makes it one of the best-positioned gold plays on the market.
However, time is running out for investors to make the most of this undervalued opportunity before profits begin to influence the Wiluna share price.
Shares in Wiluna Mining last traded for 56.5 cents.
