NeuRizer will raise $1.6m and confirms it is solvent

NeuRizer will issue almost 800 million new shares in a $1.6m capital raise which the urea project developer says ensures its solvency.

An artist's impression of NeuRizer’s proposed $2.6bn urea production facility at Leigh Creek.

NeuRizer shares dropped by almost a third on Monday after the company announced it would issue almost 800 million new shares in a highly-dilutive capital raise.

The Adelaide-based company, which has been developing a long-overdue urea project at Leigh Creek using controversial underground coal gasification technology, said on Monday it had raised about $1.6m before costs at 0.2c per share.

The new shares will add to the 1.9 billion shares the company already has on issue, meaning the new shares will constitute 29.6 per cent of the shares on issue. The company had just $569,000 in the bank at the end of the last quarter.

The issuance of about 530 million of the new shares will be subject to shareholder approval given they are above the company’s annual capacity to issue new shares.

“The funds raised from the placement will be used for general working capital of the company, enabling progress on the NeuRizer Urea Project,’’ the company told the ASX.

“Additionally ... this placement increases the total available funding ... to 1.18 quarters.

“The board also confirms that the company is solvent.’’

The company’s July quarterly indicated NeuRizer had just 0.31 financial quarters’ worth of funding left, based on its anticipated cash burn and cash on hand.

NeuRizer also revealed in its recent quarterly that a delegation including representatives from India’s Ministry of Coal had visited the project, which has been mothballed since a pilot test in 2018-19.

“All parties are exploring the possibility of implementing underground coal gasification (UCG) in Indian geo-mining conditions,’’ the company said.

“NeuRizer and (a Coal India subsidiary) have subsequently signed a nondisclosure agreement. “We look forward to update the market on these developments.’’

NeuRizer has over the past decade set numerous deadlines for what was at one stage going to be an enormous gas project, and has morphed into a urea project aiming to feed into the fertiliser market.

Those deadlines, which initially foresaw gas production at least five years ago, have not been met, and the company’s ability to continue as a going concern has been at risk, with the company more than $50m in debt at the end of December.

The company has also been notified over the past year that its proposed stage one project would be subject to the “water trigger” under the federal Environment Protection and Biodiversity Conservation (EPBC) Act, which means it will have to generate a full environmental impact statement, which it had previously believed was not necessary.

The project, at the site of the former Leigh Creek thermal coal mine, began its life a decade ago as a synthetic gas project, costed at up to $2.6bn, and, its proponents said (underpinned by consultants’ reports) containing thousands of petajoules of gas.

However, after years of political and community controversy, the listed entity backing the project, previously Leigh Creek Energy and now known as NeuRizer, announced in 2021 that it had done away with its aspirations to be a gas and energy company to focus on urea, and renamed the project the Leigh Creek Urea Project.

In April 2022 the company told the market that while it had completed an “initial” bankable feasibility study, it was not allowed to release this “in accordance with regulatory requirements’’, and had to wait until a final BFS was ready.

It also signed on Korean firm DL E&C Co as a major shareholder, taking up $US10m in new shares for a 9.1 per cent stake in the company at 15c a share.

By late-2023, the BFS was still yet to be completed.

Negotiations with a strategic partner over the NRUP project continued, as did the process of trying to obtain environmental approvals.

In January this year, the company made its managing director position redundant, letting go CEO Phil Staveley, who in the 2023 financial year was paid almost $2m, including almost $1.2m in cash and $488,000 worth of share options.

Executive chairman Daniel Peters was paid $565,700 in base remuneration for that year, with share options pushing his total package to $1.1m, down from $2.1m the previous year, in which he was granted $1.6m of share options.

The company’s December quarterly report, released on January 18, revealed that the potential strategic partner had walked away, throwing the timeline for a proposed final investment decision on the urea project up in the air.

Crucially, the SA government also “chose not to allow stage 1 of the NRUP unless a determination was made under the EPBC as to whether ... the project was a controlled action’’, the company told the ASX.

The company did a self-assessment under the Act, which it said showed that there were “no matters of national environmental significance present or likely to be significantly ­impacted’’.

However, the federal government’s Department of Climate Change, Energy and Water told the company it would need to do an environmental impact statement (EIS) for stage 1.

The company also said the government pushed through changes to the Act late last year, bringing unconventional gas under its remit.

“These changes were made despite ministerial assurances that no changes would occur until late 2024 and after consultation,” the company said.

“Given the recent legislative amendments, it is unlikely that stage 1 could commence in this (2024) calendar year,’’ NeuRizer said. “This has flow-on effects on the company’s other timelines.’’

NeuRizer had $1.47m in ­current assets, including $844,480 in cash at the end of 2023, and $51.9m in current liabilities. The company has to date capitalised $121.7m in exploration and evaluation expenditure.

NeuRizer’s half-year report included a “going concern” statement about the company’s ability to continue to trade on.

Its sole Australian directors are now Mr Peters and his daughter Jordan Mehrtens, who has been employed by the company for some years and has been its company secretary for some time.

The most recent quarterly did not include a current debt figure.

Originally published as NeuRizer will raise $1.6m and confirms it is solvent