Heritage to raise $1.7m to keep up exploration

Listed mining explorer Heritage Gold plans to raise up to $1.7 million to keep the business going for another year and to continue exploring.

Managing director Peter Atkinson said the money would fund further exploration of current projects, advance the Thackaringa cobalt project in Australia and the spin-off of company Mid-Earth Minerals, and provide working capital.

"We believe it's what we need for the next 12 months," Atkinson said.

The Parnell firm plans to make a one for four pro rata renounceable rights issue to shareholders at an issue price of A2.5c a share.

The rights issue - underwritten to a minimum of $500,000 - would raise about $1 million to $1.2 million.

Heritage Gold is also planning a placement of shares and has received binding applications from Australian investors to subscribe to 16,667,000 fully paid ordinary shares at A2.5c a share - equivalent to A$416,675 ($470,000).

Together the two deals could see the company raise about $1.7 million.

Details of the rights issue are being completed, and the placement to Australian investors is subject to shareholder approval at this Friday's annual meeting.

The placement made sense, Atkinson said.

"I don't believe there's any reason they [the shareholders] wouldn't support it.

"If there was any way to raise funds at a better price than that we would have, it's as simple as that."

The money would help the float of Heritage's Waihi gold exploration subsidiary Mid-Earth Minerals - a vehicle for turning exploration into mining.

"The ultimate objective is to turn the exploration properties into mines and convert that expenditure into a profit, but while you're an exploration company of course you simply spend money, you don't earn any," Atkinson said.

The timing of a move to mining would have to wait for the release of the Mid-Earth prospectus - expected in about six or seven weeks.

The flotation was going to plan with a listing expected before Christmas, he said.

Heritage shares were untraded yesterday, but they last changed hands at 3.5c each.

* The planned merger of dual-listed Oceana Gold and Australian firm Climax Mining continued with Federal Court of Australia approval for meetings on October 30, when Climax's shareholders and listed option holders will vote on the deal.