Lion Energy to raise $10.6m in rights issue

West Perth-based Lion Energy Ltd aims to raise $10.6 million through a non-renounceable rights issue to acquire an interest in oil and gas tenements held by US-based Ridgelake Energy Ltd in the Gulf of Mexico.

The company will issue its 3.04 billion shares to shareholders at a rate of one for every share held, at a price of 0.35 cents each.

It will also issue either 100 million pre-consolidation options or 1 million post-consolidation options to Ridgelake as part consideration for the right to earn an interest in the leases.

Lion has also stated that the current rights issue will not be sufficient to fund all of its financial obligations with respect to the leases, should the Company participate in all of the drilling programmes disclosed in the Prospectus. To meet the total expenditure set out in the Prospectus the Company will need to either conduct another capital raising, sell some other interests or farm out part of its expenditure obligations for the leases.

It has further flagged a plan to consolidate its share capital on a 1 for 100 basis, reducing the number of issued shares to a more modest 60 million.

The deal is being underwritten by Intersuisse Ltd, and will open on September 25, to close on October 10.