Australian exploration company Ragnar Metals has reached a strategic investment agreement with compatriot gold miner Kaiser Reef.

The agreement will see Ragnar Metals acquire a stake in Kaiser Reef, with the company agreeing to pay A$0.15 per share without a discount.

Additionally, this investment will also grant Ragnar representation on the Kaiser board.

The strategic investment will be executed via a two-tranche placement totalling just over A$5m, with completion expected by 18 July 2024.

The first tranche will consist of 6.2 million shares and 3.1 million unlisted options amounting to A$980,000, while the second tranche includes 27.2 million shares and 13.6 million unlisted options, valued at A$4.08m.

In addition to the share acquisition, Ragnar will receive a 1.5% net smelter return royalty on gold produced from the A1 Gold Mine for a five-year period, starting on 1 July 2025.

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The capital from the placement will be used to finance the final push towards the establishment and deployment of the dedicated Nova Gold Project team.

This team will operate independently alongside the current mining crews until the Nova Gold Project is commissioned.

As part of the agreement, Ragnar chairman Steve Formica has been appointed as the non-executive chairman of Kaiser.

Subject to shareholder approval, Kaiser will also issue two million unlisted options to Formica, exercisable at A$0.25 each and expiring four years from the date of issue.

This decision for the strategic investment followed a period of due diligence by Ragnar, focusing on the commencement of mining at Kaiser’s A1 Nova Gold Project.

The Nova Gold Project is known for hosting high-grade gold mineralisation at unmined levels of the A1 Mine.

The development of the A1 Nova mine is expected to significantly increase high-grade gold production, transitioning from the current remnant gold mining operation that has been active for the past 40 years.

Kaiser noted that it has invested around $24m in capital costs to access the Nova Gold Project, which is located below the remnant mine workings.

It has also implemented significant upgrades to power, fleet and ventilation systems in preparation for the new mining operations.

The engineering plan for the A1 Nova mine aims to create a modern engineered mine layout, overcoming the limitations faced by the current operations.