The relatively small-scale operation at the project's High Grade Zone was due to the difficulties in sourcing investment funding over the last several years. However, the cash flow from the HGZ would be used to further develop the mine, further mineral exploration of Crater Mountain and to conduct a drilling program at the company's graphite project in Queensland.

Eligible shareholders would receive one fully paid ordinary share for every four ordinary shares held by them, with an issue price for each new share of $A0.09.

Crater Gold advised the market it has 136,435,320 shares on issue, 138,190 convertible notes and 7,457,500 unlisted options.

The company also said major shareholder Freefire Technology has agreed to take up its full pro rata entitlement under the rights issue. It holds 60.42% of the company's issued share capital and is controlled by Crater Gold chairman Sam Chan, who controls a further 564,500 shares in addition to his holdings through Freefire. This brings the total to 60.83%.

It has agreed to underwrite the rights issue shortfall at the said $A0.09 per share, however it is subject to a underwriting deed entered into by Freefire and Crater Gold on March 23.

Despite approaching a number of potential underwriters, the company was not able to find one that could match the terms offered by Freefire.

Crater Gold resumed operations at the HGZ after the relaxation of a cessation order by the PNG Mines Safety Inspectorate earlier this month.

The order was instigated due to a road fatality at the mine site last year.

Work at Crater Mountain is subject to a number of safety conditions, which include risk assessments before the start-up, the use of site vehicles only for their intended purpose and operations only to be carried out by fit and competent persons.