LONDON (Alliance News) - Kolar Gold Ltd on Wednesday said Geomysore Mining Services (India) Pvt Ltd, in which it holds a stake, has secured funding to back a drilling programme.
Kolar said in March GMSI was in the process of raising USD2.2 million for additional drilling and to complete the economic feasibility study for the East Block open pit mine in India. Kolar said at the time it would not be able to participate in the fundraising without raising funds itself and, through not participating, its holding in GSMI would be diluted by the fundraising.
Since then, Kolar said GSMI has secured a USD2.4 million equity investment from Thriveni Earth Movers Pvt Ltd, a leading Indian mining firm and GSMI's drilling contractor.
This will cut Kolar's holding in the company to 20.5% from 23.4% and give Thriveni a 38% stake in GSMI, making it the largest shareholder.
The funds will be used to back the drilling work at the East Block site, complete the study and provide GSMI sufficient working capital to cover it to the end of 2016.
"We are delighted that GMSI has agreed funding to undertake the additional drilling and to complete the feasibility in relation to the open pittable resource at Jonnigiri. This is another important step towards realising the possibility of building one of the first producing gold mines in India for decades," said Kolar Chairman Harvinder Hungin.
Kolar shares were up 22% early Wednesday to 1.46 pence.
By Sam Unsted; samunsted@alliancenews.com; @SamUAtAlliance
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