Diversified metals company Marengo Mining will undertake an Aus $12.5million capital-raising through a share placement comprising 50 million shares at 25 cents each, to be made in two tranches to both existing and new Australian, and international institutional, and professional investors.

As part of the raising, Sentient has agreed to subscribe for $6.3 million of the placement and after the placement is finalized will become Marengo's largest shareholder with a 19.75 stake in the company.

A number of the company's current key shareholders, including Sempra Metals & Concentrate Corp (USA), have also agreed to participate in this strongly-supported capital raising.

The proceeds of the placement will underpin the next key phase of activity at Marengo's 100%-owned Yandera copper-molybdenum project in Papua New Guinea, including the recently started pre-feasibility study and ongoing programs of diamond drilling designed to substantially increase the initial 371 million tonne copper-molybdenum resource announced last month. The study includes preliminary mine design and open pit optimisation, metallurgical testwork, plant flowsheet design and throughput options with capital and operating cost estimates.

The funds will also be used to start baseline studies for the environmental and social aspects of Yandera Project development; ongoing diamond drilling at the Gremi, Omora and Imbruminda zones to specifically target higher grade zones within the current resource envelope. These near-surface zones having the potential to maximise cashflow in the early stages of mining operations; drilling of deeper targets at Gremi, Omora and Imbruminda which have the potential to add very significant tonnages to the existing resource; selected drilling of other mineralised zones, along the extensiveYandera porphyry sequence, where earlier drilling intersected very significant copper-molybdenum mineralisation; and for general corporate purposes and to provide working capital to underpin Marengo's continued development as a PNG-focused metals company.

Investors in Sentient include institutional investors, university endowment funds, government agencies, corporate pension funds, family offices and resource industry participants. The global spread of investors complements Sentient's global mandate.

Marengo managing director Les Emery says the capital raising represents a major step forward for the company and will result in the introduction of a new major shareholder and other strategic institutional, and professional investors to support the future development of the Yandera Project.

"We are very pleased with the strong support received for the raising, which I believe reflects growing recognition of the quality of the Yandera Project as a potentially world-class, long-life copper-molybdenum mine. It is particularly pleasing to welcome Sentient to our register and consider their support as further confirmation of the profile that Marengo has gained, since acquiring the Yandera Project, " Les Emery says.

"The recent announcement of the initial resource for the central zone at Yandera has given an indication of the scale and potential of this project, and we have received strong support from both existing and new shareholders keen to participate in its next phase of development," he says.

"The funding now in place will see us through to completion of the pre-feasibility study and underpin ongoing diamond drilling programs which will continue through until the end of this field season before restarting in early 2007.

"Based on the success to date, we are confident that these programs will deliver further strong increases in the resource inventory at Yandera."

Located in Madang Province less than 20km from the planned US$850 million Ramu nickel-cobalt project, the Yandera Project is believed to be one of the South Pacific's largest undeveloped copper-molybdenum projects.

The Yandera porphyry is an extremely large mineralised system containing eight known, coherent mineralised zones, identified to date from more than 100 diamond drill holes (for some 33,000 metres), which were mostly drilled by Kennecott and BHP in the early 1970s. More than US$20 million was expended at that time, resulting in the generation of a number of pre-JORC resource estimates and the completion of a mining scoping study by BHP in the mid 1970's.

Since entering the Yandera Project in early 2005, Marengo has completed a full review and digitisation of this extensive database, and to date, has completed an additional 16 diamond drill holes (for some 5000 metres). Earlier this month Marengo released a preliminary resource estimate for the central portion of the Yandera porphyry system.