Leigh Creek Energy raises $18m for urea project
Leigh Creek Energy has raised $18m from investors as it forges ahead with the first stage of its $2.6bn urea production facility in South Australia’s Far North.
Leigh Creek Energy has completed an $18m capital raising to support the first stage of its $2.6bn urea production facility in South Australia’s Far North.
The placement was supported by Australian and global investor groups, and will be issued at 18 cents per share, with an attached unlisted option exercisable at 28 cents per share within the next three years. Issue of the options will require shareholder approval.
Funds raised will be used to progress the first stage of the Leigh Creek Energy Project towards production of commercial syngas and power generation.
Around $6.5m will be spent on drilling and construction of gasifier chambers, while $6m will go towards the acquisition of power generation infrastructure.
A further $1m will go towards the acquisition of 3D seismic surveys, and $4.5m will go to general working capital.
Leigh Creek Energy managing director Phil Staveley said the capital injection was a major step forward for the company’s plans to deliver urea into the Australian and overseas markets.
“The opportunity presented by this capital raise means we can immediately focus all our resources and attention on driving forward the commercial stages of the project,” he said.
“In the coming weeks we expect to execute the final agreement for engineering, procurement, construction and completion of the urea plant with Korean giant DL E&C and offer further equity to our existing, loyal shareholders.”
The placement price represents a 20 per cent discount to the last trading price of 22.5 cents prior to the placement and a 21.6 per cent discount to the 5-day VWAP (volume weighted average price).
Evolution Capital Advisors acted as lead manager for the placement, and will receive a 6 per cent fee on funds raised plus 10 million options exercisable at 28 cents expiring in three years, subject to shareholder approval.
Leigh Creek Energy announced in March that it would go ahead with stage one of its project, which involves drilling more in situ gasification wells and building a power plant up to 5MW in size.
Stage two, which would bring the entire cost up to as much as $2.6 billion, would involve a large-scale drilling program, a large power plant and the construction of an urea plant to service the fertiliser market.
