Citation soars on $7m acquisition

Oil and gas company Citation Resources is seeking to diversify its business by acquiring an initial 40 per cent interest in an unlisted firm that converts rubber waste into clean fuels, for a cash and share package worth about $7 million.

Citation will acquire its 40 per cent stake in Pearl Global by spending $3 million on the company’s Tyre Recovery Process project, and by issuing 80 million out of 100 million shares, at 5 cents each, to Pearl in a $5 million entitlement issue.

Pearl’s TRR project is a process by which end-of-life vehicle tyres are converted into commercial by-products with near-zero emissions, by virtue of a unique heating system that manages key elements within the thermal desorption process.

Citation said its strategy was to acquire the interest in Pearl, while using the remaining funds from the capital raising to conduct further development activities at its existing projects in Texas and Guatemala.

It also completed a working capital placement to raise $500,000 and, separately, intends to settle $1 million of its current debt by issuing 20 million shares at 5 cents each to various debt holders.

After acquiring the 40 per cent stake in Pearl, Citation will be granted the option to acquire the remaining 60 per cent, but will be subject to ASX listing rules.

Citation's board comprises former Range Resources directors Peter Landau (who is chairman) and Anthony Eastman, and Erin Resources chairman Brett Mitchell.

Citation shares came out of a three-month trading halt and closed 4,000 per cent higher at 0.5 cents each.