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Placing and subscription to raise £2.2 million to develop UK Underground Coal Gasification and Southern North Sea Gas Licences
Cluff Natural Resources Plc, the AIM quoted natural resources investing company, has announced that it has conditionally raised approximately £2.2 million, before expenses, through the aggregate placing and subscription of 52,013,520 new ordinary shares of 0.5p each at 4.25 pence per share with a range of new and existing institutional and private investors.
The Placing comprises 44,222,332 Placing Shares that the Company expects to issue on 15 April 2015 and 7,791,188 Placing Shares that the Company expects to issue on 11 September 2015.
This funding represents a significant step for CLNR as it continues towards the commercialisation of its deep underground coal gasification licences in the UK and its aim to unlock the vast energy potential of the country’s un-mined offshore coal resources as well as in the development of its Southern North Sea gas licences.
The Placing is conditional, amongst other things, upon shareholders passing the resolution to be proposed at a general meeting of the Company to be held at 11.00 a.m. on 14 April 2015. A circular, containing information in relation to the Placing and convening the General Meeting, is expected to be sent to Shareholders today.
Approximately £1.4 million of the net proceeds of the Placing is anticipated to be utilised to develop the Company’s most advanced licence – the Kincardine project in the Firth of Forth, Scotland. In November 2014 the Company announced a JORC resource estimate at Kincardine which confirmed the licence area as being suitable for UCG. The resource statement confirmed a previous feasibility study completed by the Department of Trade and Industry, which previously highlighted the suitability of this area for UCG development.
In the course of the current year, the Company will focus on preparing and submitting a planning application by year end, which will include an Environmental Impact Assessment for a UCG production test project at Kincardine. Between approximately 2016 and 2018, CLNR anticipates constructing, operating and then de-commissioning a production test plant. Assuming positive results from the test plant, the Company will then look to secure commercial offtake agreements and obtain relevant approvals to construct a full scale commercial project.
CLNR also has five North Sea promote licences for conventional gas exploration which were awarded to the Company in December 2014, over 2,400km2, covering a total of eleven blocks in an emerging gas province of the Southern North Sea. The licences are located in close proximity to a number of recent discoveries (e.g. the Breagh field) which have been identified and unlocked by new broadband 3-D seismic and advances in drilling and completion technology. The licences are also in shallow water close to established infrastructure and gas markets. In order to unlock valuein this proven gas basin, the Company anticipates utilising approximately £0.4 million from the Placing to acquire and process seismic data to fully define prospects over these licence areas with the primary focus being the Company’s licence P2252 which contains the undeveloped Lytham discovery in block 42/1 (CLNR 100% interest). Following this, CLNR will seek to secure suitable farm-in partner(s) ahead of a drill-or-drop decision by the end of 2016.
The remainder of the net proceeds from the Placing, in addition to the Company’s existing cash balance (totalling £1.07 million as at 31 January 2015, unaudited) will be used for corporate overheads and working capital purposes through to approximately the end of Q1 2016.
Notably, the Company entered into a memorandum of understanding in February 2015 with Halliburton Manufacturing and Services Limited, one of the world’s largest providers of products and services to the energy industry. The purpose of the MOU is to collaborate on the development of both the Company’s UCG and Southern North Sea gas assets in the UK, which includes acceleration of the development of knowledge and capabilities of CLNR in relation to its UCG and North Sea assets, technical consultation and the provision of technical and consultancy services and projects by Halliburton.
In addition to the development of its UCG and Southern North Sea gas assets, the Company proposes to continue to evaluate other potential natural resources opportunities in line with its investing policy.
