Shares in Vatukoula Gold Mines leapt over twenty per cent on Wednesday after it announced a new Chinese investor was on board and paying a significant premium for new shares.
The AIM-listed gold producer said it had entered into an agreement with the Shengen Xintai International Mine Industry Group, with the latter agreeing to invest £10.3m for the issue of 20m new ordinary shares.
This would be at a premium of approximately 60% over the share price as at 28 August, the firm said.
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Vatukoula said the proceeds would be added to working capital and used towards a number of key strategic objectives including the Vatukoula mine's ongoing development and capital investment programme.
This would allow the mine to increase production to a sustainable and profitable level, the company said.
Chief Executive David Paxton, said Xintai's investment was a significant step for his firm.
"It is not only a vote of confidence in the Vatukoula Gold Mine but it puts the company on a sound financial footing for the expansion of the mine and allows us access to further technical expertise via Xintai's technical partners CGST," he said.
The financing will be completed in two tranches via the issue of a £3,195,900 convertible loan and the issue of 13.8m new ordinary shares in the company at a price of 51.65p per share.
The new shares would raise a total of £7,134,091, the firm said.
The loan note will automatically convert to 6,187,626 ordinary shares when the placing closes, meaning Xintai will invest a total of £10.3m to acquire a total of 20m new ordinary shares.
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