Perth-based explorer Elixir Petroleum has entered into an agreement to acquire a Mongolia-focused coal seam gas business in an all-scrip deal worth about $4 million.
Perth-based explorer Elixir Petroleum has entered into an agreement to acquire a Mongolia-focused coal seam gas business in an all-scrip deal worth about $4 million.
Elixir will issue 79 million shares to acquire Golden Horde, a private Australian company established in 2011 with a focus on building a coal seam gas business in Mongolia.
Golden Horde is awaiting final Mongolian government approval for the awarding of a production sharing agreement, which will allow the business to explore for coal seam gas in the country.
The acquisition is subject to the target receiving that production sharing agreement, as well as Elixir completing a $1.6 million capital raising, which was achieved today through the placement of 40 million shares.
Last year, Elixir was snubbed by oil and gas company AWE when it attempted to buy a majority stake in the Cliff Head offshore oil project. The stake went to Cottesloe-based Triangle energy Global instead, in a $3.2 million cash-plus-royalties deal.
As part of the Golden Horde acquisition, the target’s managing director, Neil Young, will join Elixir’s board as an executive director and lead the business as its chief executive.
“Elixir has reviewed many opportunities over the past 12 months and this one stood out above all others due to its potential size, its low cost but high-impact exploration potential and of course its proximity to the third largest gas user in the world, China,” Elixir managing director Dougal Ferguson said.
“There is no question that demand for natural gas will continue to rapidly grow in this part of the world and gas resources that can be cheaply and easily found, developed and produced will be a highly sought after commodity.
“It is commendable to the relationship we have forged with Golden Horde that we have been able to act quickly and pre-emptively to lock up this opportunity with such a low cost option and have already been able to meet one our key conditions with the placement heavily oversubscribed.
“We look forward to Golden Horde being awarded the PSC in the near future, which will allow Elixir to complete the Acquisition and begin exploration in this highly prospective area.”
Elixir shares were 55.5 per cent higher to 7 cents each at 11am.
