Investors have snapped up the chance to buy into the South Island's new gold business, with Oceana Gold's initial public offering closing oversubscribed.

The company, which is being spun off from Perth's GRD NL, has raised $A100 million ($NZ112 million).

The cash will be split evenly as equity for the new company and pay back for the sell down of GRD's interests.

Oceana Gold will have a dual listing in Australia and New Zealand and will comprise the assets of the existing GRD Macraes mining business in Otago as well as the company's interests in the Reefton goldfields.

The cash will be used to jump start stalled work at the Globe Progress and Blackwater mines near Reefton, doubling gold output from the South Island to 400,000 ounces a year by 2006-2007.

The institutional offer closed oversubscribed and today GRD said an offer to existing shareholders and the general public had also been oversubscribed.

Shares in Oceana begin trading on March 18 in New Zealand and Australia.