St Barbara Ltd (ASX:SBM) is undertaking an institutional placement valued at $100 million and a share purchase plan (SPP) worth $10 million to help boost its expansion of the Simberi gold mine in Papua New Guinea.

The capital raising is well-supported by existing institutional shareholders and new investors – with demand from both around Australia and overseas, and will involve a two-tranche placement of around 263 shares priced at 38 cents each (targeting institutional and sophisticated investors), and a SPP at the same price.

The funding will be plugged into St Barbara’s development schedule for its Simberi Sulphide Expansion project, specifically looking to speed up production there by five months.

This will involve elements such as the procurement and construction of the larger ball mill circuit, building of an expanded wharf for concentrate vessels and the construction of a new ROM pad and sizer installation.

The Simberi Sulphide expansion aims to add 10 years of mine life to the current Simberi operation, which is built around open-pit mining, with operations there beginning in 2008.

Managing director and CEO Andrew Strelein said the capital raising had brought on a number of new supporters.

“We are extremely pleased with the support for the Placement from our existing institutional shareholders and welcome a number of new domestic and international institutional investors,” he said.

“The work we’ve been doing on the Simberi Sulphides Expansion Project continues to highlight a very attractive project opportunity and it makes sense to move quickly, especially in the current gold price environment.

“Raising these funds now allows the project team to advance development, which is anticipated to accelerate first production from Simberi Sulphide by up to five months.”

St Barbara shares have fallen following the announcement, and at 10:37 AEDT, they were trading at 37.5 cents – a drop of 18.48% since the market opened.

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