Dual-listed L&M Energy Ltd has raised $A7 million ($NZ8.6 million) by selling 77 million shares to institutions and sophisticated investors at nine Australian cents a share to help fund its Ohai coal seam gas project in Southland.The company's share p
Dual-listed L&M Energy Ltd has raised $A7 million ($NZ8.6 million) by selling 77 million shares to institutions and sophisticated investors at nine Australian cents 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 $10m.
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 on similar terms.
LME 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, known as 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 2011.
The company will also investigate the potential for the developing a micro-LNG facility in the area.
"The market clearly supports our strategy to accelerate development of our Southland coal seam gas assets," said chairman Geoff Loudon.
The company is New Zealand's biggest coal seam gas explorer. It is 84 percent owned by high-profile Australian miner Mr 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 from $3.1m to almost $6m, and would have to raise fresh capital.
The company has applied for prospecting rights over 2000sq km of the Waikato -- thought to contain over 2 billion tonnes of coal -- with plans to burn coal underground to produce gas that can by piped to Auckland.
According to a presentation Mr Loudon owns 28 percent, Campania Holdings Inc 28 percent and Tangent International Ltd has 28 percent.
LME regards its Ohai and Waiau permit areas 70km northwest of Invercargill as having the greatest potential for development, with an estimated 173 petajoules of energy from coal seam gas.
