An opportunity to drive recovery

“WE are mindful of, but not deterred by, the current state of capital markets … Ultimately investors are always looking for growth opportunities because these are the drivers of recovery.”

These were the words of West Musgrave Mining managing director Don Boyer last week as his company bravely listed on the Australian Stock Exchange.

The listing followed former hopes of an August float and a downsizing of the initial public offering from $4.5 million to $3.5 million prior to September 11. While the IPO closed fully subscribed, allocating 17.5 million 20-cent shares each with a free attaching listed option, the best price achieved on opening day was 15 cents.

However, Mr Boyer confirmed the company would immediately drill targets in its West Musgrave prospects.

With 1,000 square kilometres of prospects, some of which have been held since 1998, it’s not hard to understand why West Musgrave Mining is keen to push ahead with an exploration program in territory highly valued and aggressively sought after by much larger companies.

Australian Heritage Group Limited, West Musgrave’s major shareholder through its mineral and resources investment subsidiary Mineral Securities, said the brave ones are those investors not taking advantage of a weak market when exciting things were happening in the Musgraves.

Australian Heritage Group is also forging ahead with its fourth quarter float of Whicher Range Gasfields Limited.

A subsidiary of Mineral Securities Limited, Whicher Range Gasfields Limited, was created to farm into gas exploration permit EP408, 280 kilometres south of Perth, and fund the drilling of the permit’s fifth well, Whicher Range-5.

To do this, Whicher Range Gasfields is raising $10 million through an IPO due to close mid-month.

The strong interest in the EP 408 farmin opportunity shown by a number of parties earlier this year underscores Australian Heritage executive chairman and Whicher Range chairman Anthony Barton’s “very exciting” label for this venture.

“This is more of a development story than an exploration story. This is the largest known onshore gasfield, with proven reserves, and in the heart of ready markets,” Mr Barton said.

While high quality gas has been recovered from four wells within the field, it has not been produced in commercial quantities due to drilling and completion difficulties.

But two years ago permit operator Amity Oil demonstrated it could recover gas from a damaged completion and has now completed preliminary work, including obtaining all necessary permits and approvals, to drill Whicher Range-5, using an underbalanced air-mist technique.

The technique has never been used at this depth in Western Australia, a Department of Minerals and Petroleum Resources spokesperson said, but would minimise formation damage and maximise gas flow.

Amity Oil will reduce its 73.78 per cent interest to 50.1 per cent on completion of Whicher Range-5, while the other permit partner, GeoPetro Resources Company, will decrease its interest from 26 per cent to eight per cent.

Whicher Range Gasfields will then hold 31.55 per cent of EP408 and the substantial Whicher Range gas field, 20 kilometres from Busselton, in the onshore Perth Basin.

A second memorandum has been signed by the same parties, in which Whicher Range Gasfields will acquire a 30 per cent interest in EP 381, adjacent to EP 408.

The Whicher Range Gasfields offer comprises 50,000,000 20-cent shares, with one free 2004 option for every two shares.

As global economic uncertainty continues, however, some WA listed companies are changing plans, behaving cautiously or even looking for alternatives as other partners pull out of deals.

WRF Securities Limited has announced it will not proceed with a previously flagged acquisition after “taking into account the current poor economic conditions”. A directors’ statement said: “We believe that it is in the best interest of our shareholders to retain a conservative outlook until the current world turmoil settles down.”

Inovax Limited has withdrawn a prospectus and is looking around for another underwriter, after CIBC World Markets withdrew from its agreement to underwrite a rights issue. While CIBC utilised a “force majeure” clause in relation to the September 11 attacks in the United States, priority sub-underwriter to the Inovax fundraiser, Alchemist Healthcare Limited, is continuing its support.

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