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Cluff Natural Resources (LSE:CLNR), a company founded by natural resources entrepreneur Algy Cluff, is pleased to announce that it proposes to raise £2.0 million by way of a placing and subscription of 66,666,667 new ordinary shares of 0.5 pence each in the capital of the company at a price of 3.0 pence per Placing Share with a range of new and existing institutional investors together with a number of private investors.
The funds raised will be utilised to advance the Company’s Deep Underground Coal Gasification Licences (“Deep UCG”) in the UK in line with its strategy to unlock energy by converting untapped coal into gas.
The Placing is conditional, amongst other things, upon Shareholders passing the resolutions to be proposed at a general meeting of the Company to be held at 11.00 a.m. on 28 November 2013 (the “General Meeting”). As a result, a circular is expected to be sent to Shareholders today containing information in relation to the Placing and to convene the General Meeting.
Since January 2013 the Company has been awarded five Deep UCG licences in the UK, totalling 30,881 hectares, by The Department for Energy and Climate Change and by The Coal Authority. The licence areas include Kincardine and Largo Bay in the Firth of Forth in Scotland; the Loughor Estuary in Carmarthenshire in Wales; the Dee Estuary in Merseyside and North Wales; and Whitehaven in North Cumbria. Deep UCG is a proven process which enables coal, in situ, to be converted into syngas, by partial oxidation, and has been utilised onshore in a number of countries such as Australia, South Africa, China, Canada and the United States of America. The Directors believe that Deep UCG offshore could lead to the gasification of much of the billions of tonnes of untapped coal surrounding the UK’s coastline which is unable to be exploited economically by conventional coal mining.
CNR expects to use the funds raised to further its investing policy, including to help develop its five 100% owned Deep UCG licences in the UK. Planned work programmes include: feasibility studies, assessing geological and seismic data, 3-D geological modelling, securing land options for test drilling, conducting Environmental Impact Assessments and increasing levels of stakeholder engagement. The Company will also seek to appoint a Senior Project Manager or Chief Operating Officer to manage the development of its Deep UCG portfolio. Funds will also be utilised to strengthen the balance sheet, to support further licence and planning applications, the assessment of additional natural resources opportunities and on-going working capital.
In addition to the development of the Deep UCG licences CNR has acquired to date, the Company proposes to continue to evaluate other potential oil and gas projects in line with its investing policy, as it aims to build a portfolio of resource assets and create value for shareholders.
In order to put CNR in as strong a financial position as possible going forward, the Directors have identified a number of measures it proposes to implement to preserve the Company’s cash resources and enable a greater share of future expenditure to be put towards the development its five Deep UCG licences and the pursuit of a transformational acquisition of an oil and gas project.
These measures include a commitment to reduce board and staff costs, together with a number of other measures identified by the Directors which are anticipated to significantly reduce the Company’s projected cash expenditure in the calendar year 2014.
