The company has received commitments to raise $16 million via a placement of 44.4 million shares to corporate, institutional, professional and sophisticated investors.
Canaccord Genuity and Veritas Securities acted as joint lead managers and bookrunners to the placement, while Euroz Hartleys acted as co-manager.
The company will seek to raise a further $2 million via a share purchase plan.
The issue price for both offers is 36c per share, representing a 15.3% discount to Musgrave's last trading price and a 9.6% discount to the 15-day volume-weighted average price.
At completion, Musgrave will have about $24 million in cash to advance the Cue project.
The funds will be used for about 30,000m of drilling to test high-grade and high-priority targets identified in recent drilling; resource definition drilling of the recent White Heat discovery; the start of a PFS at Lena and Break of Day, as well as resource conversion; permitting; and the continuation of regional drilling.
Break of Day has a high-grade resource of 262,000 ounces at 10.2 grams per tonne gold out of a total Cue resource of 659,000oz at 3.2gpt.
"Through accelerated exploration and a focus on resource growth we can ensure we unlock the value of the project as a strategic asset," Musgrave managing director Rob Waugh said.
"This work, together with the prefeasibility study on the existing high-grade, near-surface Break of Day resource and the adjacent Lena deposit, will maximise our ability to create value for shareholders through discovery, resource growth and project development."
Last week Musgrave reported high-grade gold, including 6m at 11.5gpt gold, at Target 17, just 300m east of Break of Day.
Musgrave also has an adjacent joint venture with Evolution Mining, whereby the mid-tier producer can earn 75% of the Lake Austin project by spending $18 million over five years.
Encouraging intercepts have included 94m at 2.2gpt gold, including 29m at 5.1gpt, and 242m at 1gpt gold, including 45m at 3.3gpt.
Shares in Musgrave started the year at 10c and rose as high as 83c off the back of the high-grade Starlight discovery.
The stock fell 10.6% today to 38c, just above the raising price and valuing the company at about $165 million.
Canaccord has a speculative buy rating and 75c price target.
