Although Toronto-listed Glass Earth retained $2.36 million cash in hand for the quarter to March, the additional private placement of $C2.2 million would be mainly used to finance the buyout of a former 50:50 joint venture partner in a $NZ4 million deal in cash and shares struck in February this year.
Glass Earth has three alluvial, or placer (loose), gold production units in the Maniototo, one in the Ida Valley and two in the Manuherikia Valley, and is targeting a quadrupling of weekly gold production up to 110 ounces across the sites, expected to be fully commissioned by the end of the week.
Although Glass Earth, when in the 50:50 joint venture, took $C316,000 from gold sales during 2011, for its first quarter production to March it delivered a "disappointing" $C12,000 from gold, chief executive Simon Henderson said at the time.
Yesterday, he was upbeat that commissioning of the third unit would be completed within a few days.
He said placer gold operations were expected to generate up to $2 million during 2012 and up to $6 million in cash in 2013, based on producing "more than 100 ounces per week".
"Yes, we're out there producing gold today," Mr Henderson said when contacted.
At yesterday's global spot price for gold of $US1626.28 ($NZ2050.50), 100 ounces would be worth $NZ205,050.
Glass Earth has spent close to $40 million in mainly southern gold exploration during the past five and a-half years, but also holds tenements in the central volcanic region in the North Island, where test drilling is being done on some sites.
Mr Henderson said raising cash in the private placement was expected to close by today and had been steadily "ticking upward".
The proceeds of the placement would "primarily" be used to finance the purchase of the former joint-venture partner's share, taking Glass Earth's ownership to 100%.
"Part of the $6 million in revenue next year would also cover "a large portion of exploration costs", with about 20 employees working the three units and administration, and a further 10 in the field exploring.
Glass Earth has successfully been to the market for recapitalisation several times, having in 2011 posted a $C1.71 million loss, following a loss the previous year of $C1.46 million.
Last year, Glass Earth raised $C2.9 million and $C250,000, the latter in warrants and options.
In June 2010, it raised $3.9 million in placements.
Aside from the loose alluvial gold Glass Earth was mining, the company had always targeted mesothermal "Macraes-style"gold - gold in hard-rock quartz veins, Mr Henderson said.
Although Glass Earth could potentially produce the $6 million from about 30,000oz at today's price, Oceana Gold in calendar 2011 produced 252,499 ounces from Macraes and Reefton on the West Coast, generating gold revenue of $US395.6 million.
The Glass Earth private placement offers up to 11 million units at $C20c each. Each unit has one common share and one common share purchase warrant, the latter entitling the buyer to buy a common share at $C35c during the next 24 months.
