Australian gold explorer Lefroy Exploration has secured firm commitments to raise A$6.2m ($3.9m) through an oversubscribed placement to institutional investors.

For this placement, Lefroy will issue a total of 38.75 million shares, each priced at A$0.16. This marks a 20% discount on the company’s stock close on 19 September and a 22.2% discount on its 15-day volume weighted average share price.

The placement, which awaits shareholders’ approval, also includes a commitment from the company’s directors to invest around A$465,000.

Lefroy will use the proceeds from the placement to speed up exploration at its highly prospective Location 45 project, which is situated 20km north of Kambalda in Western Australia. It is located within the company’s 635km² tenement package, called the Lefroy project.

The mineral rights for the Location 45 project were acquired by the company in May this year. The project has two resources, including the Mt Martin gold mine, which is estimated to contain nearly 501,000oz at 1.8 grams per tonne (g/t) gold and the Goodyear nickel deposit, with almost 14,780 tonnes grading at 3.8% nickel.

The company will conduct gold exploration at the Mt Martin open pit to initially focus on resource and extensional drilling for optimal studies and to create a pathway to resume mining.

It also plans to conduct resource infill and expansion drilling at Goodyear. The drilling programme will test the upside potential of the deposit with the aim of increasing resources from inferred to indicated.

Lefroy Exploration chairman Gordon Galt said: “Lefroy had excellent buy-in from existing and new sophisticated and institutional investors, leaving the company well positioned to advance exploration at our nickel and gold assets at Location 45.

“Planning for drilling and resource expansion work at both Goodyear and Mt Martin is already well progressed and we look forward to delivering what investors want – drills turning and investment going into the ground.”