A Ramelius geologist inspects core samples.
A Ramelius geologist inspects core samples.

Ramelius Resources says it will raise $8.6 million to fund the acquisition and further develop the Kathleen Valley and Vivien gold projects north of Kalgoorlie.

The money will be raise by way of a $2.1 million placement priced at 6.5 cents and a $6.5 million one-for-four rights issue at the same price.

Both raisings will come with a free option for every two shares for which shareholders subscribe.

Ramelius announced the $4.05 million acquisition of Kathleen Valley earlier this month from Glencore subsidiary Xstrata Nickel and Giralia Resources.

The Kathleen Valley tenements, 50km north of Leinster, host a mineral resource of 130,000 ounces across three deposits.

Ramelius said it would conduct further drilling over the next six months in a bid to upgrade the resource.

It said scoping studies had already indicated the potential for a high-grade, open pit mine with low capital costs.

Managing director Ian Gordon said the acquisition of Kathleen Valley would add significantly to the company's recently-acquired Vivien gold project.

He said it would enable cost reduction synergies across both projects and significantly build on the strategy to create a high-yielding, cashflow-positive mining business, centred on the established Mt Magnet million operations.

Last month, Ramelius released a feasibility study showing it would cost at least $20 million to develop the Vivien mine, which is expected to produce 109,000 ounces over an initial 30-month mine life.

Underground development, which could start as early as September, is expected to take eight months.

Ramelius shares were off 0.5 cents, or 5.05 per cent, to 9.4 cents at 8.20am after emerging from a trading halt.

The West Australian

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