Dual-listed L&M Energy has raised A$7 million ($8.6 million) by selling 77 million shares to institutions and sophisticated investors at A9c a share to help fund its Ohai coal seam gas project in Southland.
The company's share price fell 2c to 13c when a trading halt was lifted after the
announcement. The company has signalled a capital raising of around $10 million.
The placement to institutional and sophisticated investors was managed by Philip Capital in Australia and McDouall Stuart in New Zealand. The company said it would consider introducing a share purchase plan for existing shareholders.
L&M will use the money raised for a pilot production testing programme with the aim of certifying proven plus probable, known as 2P, reserves at its Ohai coal seam gas project in Southland and for further drilling to extend its proven, probable and possible (3P) reserve position in the area.
The pilot testing programme is expected to start in August or September with the goal of certifying reserves by early next year.
The company will investigate the potential for developing a micro-LNG facility in the area.
The company is New Zealand's biggest coal seam gas explorer. It is 84 per cent owned by Australian miner Geoff Loudon, Werner Muller and Kwok Wai Chiu.
It has previously estimated it would spend almost all of its remaining cash reserves this year, doubling the cost of its capital programme to almost $6 million, and would have to raise fresh capital.
The company has applied for prospecting rights over 2000sq km of the Waikato - thought to contain over two billion tonnes of coal - with plans to burn coal underground to produce gas that can be piped to Auckland.
According to a presentation, Loudon owns 28 per cent, Campania Holdings 28 per cent and Tangent International has 28 per cent.
L&M regards its Ohai and Waiau permit areas 70km northwest of Invercargill as having the greatest potential.
- NZPA
