Northern Energy Corporation Limited today announced the completion of a $6 million placement of 4,800,000 ordinary shares at $1.25 each to help fund ongoing exploration, evaluation and development work on the Company’s portfolio of coal projects.
Net proceeds from the placement will also enable the Company to participate in the Wiggins Island Coal Terminal Final Feasibility Funding Agreement (FFFA) with the Gladstone Ports Corporation.
The placement, managed by Austock Corporate Finance, received very strong demand from both existing and new investors, resulting in a significant oversubscription and large scalebacks.
NEC’s Managing Director Keith Barker said the level of support received had been especially pleasing given the challenging market environment.
“The outlook for coal demand remains strong and the funds raised will enable the Company to continue to progress its diverse portfolio of coal projects towards development,” he said.
Settlement and allotment of shares under the placement will occur on 21 August. It is proposed that 480,000 placement shares will be issued to an entity related to a Director of NEC, subject to shareholder approval. A notice of meeting will be sent to shareholders advising details of the approval process.
Share Purchase Plan
In order to provide other existing shareholders with an opportunity to participate in the Company’s capital raising, NEC will also undertake a Share Purchase Plan (SPP) to raise up to a further $2 million. Austock Corporate Finance is underwriting the SPP on usual commercial terms.
Under the SPP each eligible shareholder will be entitled to apply for up to $5,000 worth of NEC ordinary shares at a price of $1.25 each. The price represents a discount of approximately 8% from the August 2008 volume weighted average price. The record date for the SPP is 14 August 2008. Documentation on the SPP will be sent to shareholders shortly.
On completion of the placement and SPP, NEC will have approximately 77,712,324 ordinary shares on issue. Participation in the placement represents a broad range of institutional and private investors.
Use of Funds
Current activities for which the funds raised will be used include:-
• Ongoing exploration and evaluation, together with preparation of the Environmental Management Plan for the initial mining lease application, for the Maryborough Project;
• Mining and related engineering studies including drilling for geotechnical and groundwater assessment for the Elimatta project;
• Exploration in the vicinity of the Elimatta Project; and
• Exploration in Northern NSW continuing the Ashford Regional Coking Coal Project and exploration for thermal coal in southern Queensland.
NEC plans to export coal from the Company’s Elimatta and Yamala projects through the proposed Wiggins Island Coal Terminal at Gladstone.
Participation in the Wiggins Island Coal Terminal FFFA requires the Company to underwrite its share of the feasibility and final engineering design costs. Participation will confer certain priority rights to secure future access to port capacity.
Under the terms of the FFFA the Company will have a contingent liability until the terminal is given the go ahead. The Company is required to provide adequate security over this liability to satisfy Gladstone Port Corporation and Queensland Treasury.
This capital raising will enable the Company to provide the security required to participate in the FFFA.