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- Small-cap gold producer AuStar Gold (AUL) has locked up its shares until next week as it finalises the details of an upcoming capital raise
- The company has frozen its shares until next Wednesday as it prepares to launch the raise
- At the end of June, AuStar had just $157.000 in the bank after going cashflow-negative over the quarter by around $650,000
- However, a cashflow-positive July meant the company was able to get by without tapping investors for funds until now
- Shares in the company last traded yesterday afternoon for 33 cents each
Small-cap gold producer AuStar Gold (AUL) has locked up its shares until next week as it finalises the details of an upcoming capital raise.
The company has requested back-to-back trading halts as it prepares to tap investors for fresh funds, meaning shares are only slated to trade again on Wednesday, September 9.
Details about the raise — including how much AuStar plans to pocket and at what price new shares will be placed — are yet to be announced.
Of course, given the company’s most recent financial figures, the upcoming raise may come as no surprise to shareholders.
At the end of June, AuStar had $157,000 cash in the bank. While the company pulled in just under $1.3 million from customers over the quarter, AuStar was still spending more than it was earning, leading to an operating cashflow shortfall of $645,000.
Thus, at this level of spending, the company had less than two months’ worth of cash in the bank. Moreover, in late-July, AuStar said it would focus on cost-control over the September quarter, but expenditure would likely remain the same.
At the time, the company said it did not think it would need to raise capital before the end of the year, but the consideration was there if it became necessary.
The company was able to stay afloat until now after restarting drilling work at its Morning Star Project in Victoria and going cashflow-positive over July.
Nevertheless, as AuStar ramps up exploration programs at Morning Star and the surrounding areas, the company is now seeking some fresh capital.
Shares in AuStar last traded for 33 cents each yesterday afternoon. The company has an $11.53 million market cap.
