The Classic Minerals Ltd (ASX: CLZ) share price has more than trebled on Friday on news the company has secured a $10 million funding agreement.
The agreement will see production at the explorer's flagship Kat Gap gold project kicking off.
Shares in Classic Minerals last traded on 1 September when they closed at 1.6 cents.
Today, the stock notched a massive 287.5% gain, hitting a high of 6.2 cents. The Classic Minerals share price has since settled slightly to trade at 5.9 cents – representing a 268.7% rise.
Let's take a closer look at today's news from the ASX gold share.
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What's driving ASX gold share Classic Minerals sky-high?
The share price of ASX gold hopeful Classic Minerals is launching upward on Friday after the company broke a five-session trading halt with transitional news.
It has entered an agreement with Goldvalley Brown Stone that will see Goldvalley provide up to $10 million in non-recourse funding for production at the Kat Gap project in Western Australia. Though, the deal is still subject to several conditions.
The Kat Gap project houses around 90,000 ounces of gold, according to Classic Minerals.
Goldvalley has agreed to fund the extraction and processing of ore from the project in parcels of 100,000 tonnes. Revenue from each parcel will help to fund the next.
The pair have agreed to split the project's net profits 70% to 30%, with Classic Minerals walking away with the larger share.
The company's chair John Lester commented on today's news, saying:
The Kat Gap project has reached an exciting stage with a clear path to mining and processing of gold now laid out.
We have begun the transition from explorer to producer and shareholder patience will be rewarded.
The path ahead
The $10 million will be provided over 12 months. Mining will continue under the arrangement until 500,000 tonnes at a minimum grade of 2.85 grams of gold per tonne has been mined and processed.
Classic Minerals also noted its project management plan should be granted approval any minute now. That will allow operations at Kat Gap to kick off.
Goldvalley managing director Yuzheng Xie also commented on the news driving the Classic Minerals share price today:
Classic has carefully developed a very worthy gold project and coupled with Goldvalley's expertise in mining and marketing, the project now has the attributes to bring it to fruition.
