Patagonia Gold has signed an investment agreement with Black River Mine, under which the latter will provide up to $40m (£30.21m) to support the development of the company’s Calcatreu gold project in Rio Negro, Argentina.

Black River Mine is a newly formed entity led by Argentine businessman Carlos J Miguens, a shareholder in Patagonia Gold, and comprises a consortium of investors.

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The funding will be facilitated through Patagonia Gold’s wholly owned subsidiary, Patagonia Gold Canada (PG Canada).

Under the agreement, Black River Mine will purchase up to 40 million preferred shares of PG Canada at a price of $1 per share.

Upon acquiring the full allotment of preferred shares, Black River Mine will hold 40% of PG Canada, with Patagonia retaining a controlling 60% interest.

Furthermore, as part of the agreement, Black River Mine will be entitled to nominate one of three directors to PG Canada’s board and will also have participation rights in future equity issuances by PG Canada, subject to the terms of the agreement.

The financing is subject to customary closing conditions including shareholder approval and final clearance from the TSX Venture Exchange.

The gross proceeds from the transaction will be used by Patagonia exclusively for the development of the Calcatreu Project and to cover related financing expenses.

Located near the southern border of Rio Negro Province, the Calcatreu Project was acquired by Patagonia Gold from Pan American Silver in 2018.

As per the estimates, the project contains 746,000 gold equivalent ounces in the measured and indicated resource category and 390,000oz in the inferred category.

In October 2024, Patagonia Gold acquired four new mineral concessions surrounding its Mina Angela project in Argentina.

The acquisition, totalling 15,494ha, brings the company’s mineral properties in the region to more than 52,000ha.