Perseus Mining has gone back to the market for a cash top-up after dipping into the red in the second half of last year.
UBS and GMP Securities were yesterday running the book-build for the $30 million placement to institutional investors after the company declared an after-tax loss of $4.02 million in the December half.
Perseus finished the December quarter with about $16 million in cash available, down from about $35.5 million at the end of June. It had about 9000 ounces of bullion on hand.
Despite falling costs at its Edikan gold mine in Ghana, the company was still running on thin margins at the mine in the December quarter, with all-in cash production costs of $US1228/oz against an average received price of $US1318/oz.
Perseus said it would use $15 million of the capital raising to fund work at Edikan, including $7.5 million on efficiency projects at its processing plant. The rest would bolster its working capital account.
The company's half-year showed it had discussed establishing a $US25 million debt facility with its bankers but rejected the idea as it wanted to remain "unencumbered in an environment of uncertain gold prices".
Perseus' decision to instead opt for an equity raising may also have been helped by the steady recovery of its share price since hitting a 12-month low of 21Â¢ in December. Its shares topped 50Â¢ on Friday, the first time in almost four months.
The company is expected to return to trading this morning.