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Shares in gold prospector tumble on rights

NZN 17/05/2016 Edwin Mitson

New Talisman Goldmines shares dropped 47 per cent after the Coromandel gold prospecting company announced a rights issue to raise up to $12.2 million.

Investors will be able to purchase three new shares at a price of 0.5 cents apiece for every ordinary share they hold as of May 23.

In a statement, New Talisman said the price reflects a significant discount to the NZX close price on May 16 of 1.5 cents. A shortfall facility means shareholders will be potentially able to buy more if they wish.

New Talisman owns the mining permit for the Talisman gold mine, as well as properties near Paeroa in Hauraki.

The extra money raised will be used to initiate a programme to sample rocks from the mine and maximise extraction as well as continue to identify potential new reserves.

The offer will close on June 14.

In September and October last year, the company was left frustrated when two potential investors failed to deliver money as promised.

A Chinese investor had been due to buy just under 20 per cent of the company while a second investor failed to meet a $400,000 obligation under an underwriting agreement.

The shares hit a three-year high of 2 cents on May 5.

They were trading at 1.5 cents at the close on May 16, before falling to 0.7 cents at the beginning of trading on May 17. They've risen slightly since the rights issue was announced on Tuesday to 0.9 cents a share, valuing the company at $7.4 million.

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