Australian Securities Exchange (ASX)-listed gold company Spartan Resources is set to raise A$25m (before costs) ($16.18m) to support exploration activity at its 100% owned Dalgaranga Gold Project in Western Australia.

According to a company statement, Spartan has received firm commitments to raise the money through a placement to institutional investors.

The placement will involve issuing around 62.5 million new Spartan shares at an offer price of A$0.40 per share. The issuance represents 7% of Spartan’s existing shares on issue.

Canaccord Genuity (Australia) and Ashanti Capital are acting as Joint Lead Managers to the placement, while Herbert Smith Freehills is providing legal assistance.

Spartan, formerly Gascoyne Resources, will use the proceeds and existing cash balance for exploration, studies and meet care and maintenance costs for Dalgaranga.

Around A$29.3m will be used for Never Never deposit exploration including ‘look-alike’ targets and feasibility studies, while A$2.7m is earmarked to meet minimum expenditure commitments.

The company will spend A$8m on care and maintenance for Dalgaranga through to the end of November 2024.

Another A$12m was allocated to cover corporate costs and as general working capital; and A$1.2m for transaction and other costs.

Spartan managing director and CEO Simon Lawson said: “The proceeds of this placement, combined with existing cash reserves, will put Spartan in an outstanding position to capitalise on what has been an exceptional year for the Company in 2023 and significantly upscale our exploration and resource drilling efforts in the first half of 2024.

“The funds raised will be earmarked to delivering resource growth above the scheduled MRE update in December 2023, targeting the next leg of resource growth at Dalgaranga and ensuring we can maintain our current exploration momentum.”

Dalgaranga Gold Project is located 65km north-west of Mt Magnet in the Murchison Region. In FY2022, Dalgaranga produced more than 70,000oz of gold before it was placed on care and maintenance.