Panax Geothermal to raise US&7.4 million from placement and share purchase plan
In a release by the company, “Panax Geothermal (ASX: PAX) announces it has planned to raise $8 million worth of funds to assist in advancing drilling of the Salamander-1 well at the Penola Project in South Australia.
The Queensland-based geothermal company launched a placement to institutional and sophisticated investors to raise $3.75 million and a Share Purchase Plan to raise up to $4.25 million.
The proceeds of the equity raising will also be used in conjunction with existing cash reserves, combined with the remaining undrawn amount of the Geothermal Drilling Program grant to fund the drilling of the Salamander-1 well at the Penola Project.
This includes a potential increase of approximately $2 million in budgeted costs and for additional working capital requirements on the project.
The Salamander-1 well is a production well designed with the aim to convert part of the geological resources of the Penola Project into Geothermal Reserves.
The well is designed to reach a maximum depth of 4,000m, but may be pulled short following confirmation of the intersection of high porosity/permeability zones within the target reservoir.
The latest news pushed Panax shares up about 3c to 17.5c at 3pm.
Panax managing director Bertus de Graaf said the raising would mean that on completion of the current drilling and testing program, the company would continue to have cash on hand to meet working capital requirements.
“The potential additional budgeted costs mainly relate to rig transport and mobilisation from the current working location in the Cooper Basin to our Penola site in the south east of South Australia, the preparation of site civil works and site facilities, and holding costs due to delays of the arrival of the contract drilling rig,” Dr de Graaf said.
Upon the successful completion and production testing of the Salamander-1 well, Panax aims to establish the first geothermal reserve in Australia, allowing the Penola Project to move a step closer to becoming the first Australian grid connected geothermal power plant.
Following the Placement and Share Purchase Plan, Panax will have up to approximately $22 million in available cash, and an additional $4.5 million remaining to be drawn down under the Geothermal Drilling Program grant.
The Record Date for the Share Purchase Plan will be 18 November 2009.”
For the full release of the company see link below.
Source: Company release via Proactive Investors