DGO Gold has raised A$10.86 million in a placement to professional and sophisticated investors.

Kristie Batten | 24 February 2020

The 7.9 million shares will be issued at $1.35 each, a 24.6% discount to the last closing price.

Bell Potter Securities was lead manager.

DGO will seek shareholder approval next month to place 794,815 shares from the offer to directors.

The Melbourne-based company had $2.8 million in cash at the end of December.

The funds will be used for further exploration and investments.

DGO holds Western Australian exploration ground, but its main assets are a 10.7% stake in De Grey Mining and a 12% stake in NTM Gold.

The company is suspended from trading while it awaits the latest results from De Grey’s Hemi discovery in the Pilbara.

De Grey called a trading halt this morning.

DGO shares have risen from 90c to as high as $1.95 in line with as much as a fourfold rise in De Grey shares.

“DGO is a substantial shareholder in De Grey Mining and its shareholding represents a significant portion of market capitalisation of DGO and any change in the market price of De Grey Mining shares would be material to DGO,” the company said.

DGO chairman Ed Eshuys said in December the company saw major potential at De Grey’s Mallina project, which already has a resource of 1.7 million ounces of gold.

“The 25Moz Yandal belt is an analogue for the potential of Mallina,” Eshuys told the Resources Rising Stars Summer Series.

“The potential for finding a big one is why DGO has invested in De Grey.”

DGO has a market cap of $63 million, while De Grey’s is $187 million.