Patagonia Gold (LON:PGD) has raised US$10mln though a placing to start work on a new gold mine at Cap-Oeste in Argentina.
Major shareholder and chairman Carlos Miguens is putting up half of the money through a subscription at 1.5p per share, while the rest will come from an open offer at the same price that Miguens will underwrite.
Prior to the open offer and subscription Miguens had a 32.3% stake held directly and through his vehicle Cantomi.
His holding will rise to 45.3% if all other shareholders subscribe for the open offer and to just under 54% if none do.
Patagonia intends to suspend production at its current operation at Lomada next month and switch operations to Cap-Oeste.
The total cost is estimated to be US$13.5mln, of which US$2.1mln has been spent already.
Of the remainder, US$9mln is earmarked for the heap leach pad, earth works and expansion of the mine fleet and US$4.5mln for general working capital.
Cap-Oeste is expected to start production in the third quarter of 2016 at an annual rate of 82,000 oz of gold equivalent with a 24 month expected mine life, though Patagonia expects to extend this with nearby deposits.
Operating costs are forecast to be within the range of US$800 to US$850 per oz, which includes the capital amortisation and working capital component of US$4.5mln.
Christopher van Tienhoven, chief executive Officer, said: “We are pleased to have secured the funding for the development of Cap-Oeste heap leach project that will provide the company with cash generation to further evaluate the development of Cap Oeste as well as fund its exploration activities in Argentina and Uruguay."