TIDMTOM
RNS Number : 3484F
TomCo Energy PLC
16 November 2020
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16 November 2020
TOMCO ENERGY PLC
("TomCo", the "Company" or the "Group")
Placing to raise GBP3.5 million
and
Multi-site licence with Petroteq
TomCo Energy plc (AIM: TOM), the US operating oil development
group focused on using innovative technology to unlock
unconventional hydrocarbon resources, announces that:
-- it has raised GBP3,500,000 (gross) by way of a placing (the
"Placing") at a price of 0.45 pence; and
-- the Company's 50/50 joint venture with Valkor LLC ("Valkor"),
Greenfield Energy LLC ("Greenfield"), has entered into a multi-site
licence with Petroteq Energy Inc ("Petroteq") for the use of its
closed loop system for use in the recovery of oil from oil sands
(the "Oil Sands Technology") (the "Petroteq Licence" or
"Licence").
The Placing
The Company has raised GBP3,500,000 (gross) by way of a placing
(the "Placing") of 777,777,777 new ordinary shares of no par value
in the Company ("Ordinary Shares") (the "Placing Shares") at a
price of 0.45 pence per Placing Share (the "Placing Price") through
Novum Securities Limited ("NSL"), the Company's broker. The number
of Placing Shares to be issued represents approximately 115.5% of
the Company's current issued share capital.
Every two Placing Shares have one warrant attached, resulting in
the issue of 388,888,888 warrants, with each warrant having the
right to acquire one new Ordinary Share at an exercise price of 0.9
pence for a period of two years from the date of the admission of
the Placing Shares (the "Warrants"). If the Warrants are exercised
in full, this would result in the issue of 388,888,888 new Ordinary
Shares raising a further GBP3,500,000 for the development of the
Company's business, and which would represent approximately 26.8%
of the Company's issued share capital as enlarged by the
Placing.
The Company has also issued, in aggregate, 46,666,666 warrants
to NSL, giving them the right to acquire such number of new
Ordinary Shares at an exercise price of 0.45 pence for a period of
two years from the date of admission of the Placing Shares.
NSL has entered into an agreement with TomCo (the "Placing
Agreement") under which, subject to the conditions set out therein,
NSL has been instructed by TomCo to use their reasonable endeavours
to procure subscribers for the Placing Shares. The Placing
Agreement includes customary provisions including that the Placing
Agreement can be terminated, inter alia, if (i) there is a breach
of any material warranty, or any of the other obligations on the
Company which is material in the context of the Placing, and (ii)
on any matter occurring or being likely to occur which, in the
opinion of NSL, is (or will be if it occurs) likely to materially
and prejudicially affect the financial position or the business or
prospects of the Company or otherwise makes it impractical or
inadvisable to proceed with the Placing.
Background to the Placing and update on the POSP
The Placing has primarily been undertaken to further progress
the future plans of the Company's 50/50 joint venture with Valkor
LLC ("Valkor"), Greenfield Energy LLC ("Greenfield").
As announced on 16 September 2020, the board of TomCo (the
"Board") believes that the Pre-FEED (Front-End Engineering and
Design) Report prepared by Crosstrails Engineering LLC, a
subsidiary of Valkor, provides a high level of confidence that the
processes being utilised at Petroteq's existing oil sands plant at
Asphalt Ridge, Utah (the "POSP") can be scaled up to enable
commercial production of 10,000 barrels of oil per day ("bopd")
from a single site. Proof of commerciality though is subject, inter
alia, to the successful completion of the proposed upgrade works to
the POSP, that are currently being completed ahead of its restart,
and the associated trials to demonstrate the commerciality of the
processes used in the Oil Sands Technology and the identification
and securing of a suitable site for a commercial scale plant
(further details of which are set out below).
The work being undertaken by Greenfield pursuant to a work order
originally between Valkor and Petroteq that has been assigned to
Greenfield, under which Greenfield has taken over the management
and operations of the POSP (the "Work Order"), to upgrade the
capacity and improve the reliability of the POSP is progressing as
planned, with the restart of the plant expected in the week
beginning 30 November 2020. Once the POSP has been restarted,
Greenfield then intends on seeking to undertake a series of
associated tests and trials, to be verified by an independent third
party, to demonstrate both the commerciality of the processes used
in the Oil Sands Technology and proposed design for the commercial
scale plant, thereby enabling Greenfield to move forward with the
final FEED report.
In addition, as announced on 18 August 2020, following the
restart of the POSP, Greenfield will be working with Quadrise,
regarding a trial of Quadrise's MSAR(R) technology at the POSP.
This will initially comprise the supply of oil samples produced by
the POSP to Quadrise to enable them to undertake test work in the
UK to finalise the required MSAR(R) formulations, before the
planned on-site demonstration trial to produce some 600 barrels
(100 tonnes) of MSAR(R) that is intended to be undertaken during Q1
2021.
The Petroteq Licence
In order to provide Greenfield with access to Petroteq's Oil
Sands Technology and to enable it to be utilised in future
commercial scale oil sands plants to be developed by Greenfield,
Greenfield has entered into a new non-exclusive multi-site licence
with Petroteq. The Petroteq Licence has been granted in
consideration for the funding that Greenfield has provided to date
in respect of the upgrades to the POSP, being US$1.5 million, and a
further US$0.5 million to be invested by Greenfield into the
POSP.
This is an important step for Greenfield as it allows Greenfield
to use Petroteq's Oil Sands Technology, which includes Petroteq's
processes for the recovery of oil from oil sands, patents, other
intellectual property and know-how, in any future oil sands plants
to be built by Greenfield in the United States. The Petroteq
Licence also clarifies the ownership of any IP developed as a
result of the POSP upgrade and associated trials or otherwise
developed by Greenfield in the future. Any such IP will be the
property of Petroteq and pursuant to the Licence, Petroteq will
grant Greenfield the ability to utilise such IP, together with any
additional IP developed by Petroteq, in accordance with the terms
of the Licence.
For any future oil sands plants built by Greenfield utilising
the Petroteq Licence, a 5% royalty of net revenues received from
oil products produced from oil sand resources at any oil sands
plants will be payable by Greenfield to Petroteq.
The Board believes that a combination of the Petroteq Licence
and know how being developed by Greenfield through the POSP
upgrades and associated trials, will allow Greenfield to develop
its own commercial scale oil sands plant, subject to securing a
suitable location and funding.
Pursuant to the terms of the Licence, Greenfield is required to
engage Valkor as the sole and exclusive provider of engineering,
planning and construction services for all oil sand plants to be
built by or under the direction of on behalf of Greenfield under
the Licence.
Use of Proceeds
In order to facilitate the Company's future plans for
Greenfield, which assumes successful POSP trials and the completion
of the FEED study, the net proceeds of the Placing of approximately
GBP3.2 million will be specifically utilised as follows:
-- US$0.5 million (approximately GBP0.4 million) will be loaned
by the Company to Greenfield (the "Loan"), which together with the
US$1.5 million already provided by the Company to Greenfield to
upgrade the POSP, which as set out above, secures the new Petroteq
Licence. Under the terms of the Petroteq Licence, the US$0.5
million will be invested by Greenfield into the POSP in order to
satisfy the full consideration for the Petroteq Licence. The Loan
will be unsecured and has an interest rate of 6% per annum payable
at the same time as the principal of the Loan is repaid. The Loan
is repayable on the second anniversary of the date of advance or
earlier with the consent of both Valkor and TomCo or immediately on
an insolvency event of Greenfield;
-- Approximately GBP1.3 million will be utilised for the Group's
general working capital purposes over the next 12 months and beyond
and, if required, providing further funding to Greenfield; and
-- Approximately GBP1.5 million will be retained by the Company
with the intention that it is used, inter alia, to facilitate the
securing of a site by Greenfield for the first proposed commercial
10,000 bopd plant using Petroteq's Oil Sands Technology pursuant to
the Petroteq Licence. Once a suitable site has been identified, the
Company intends on providing a loan to Greenfield, which will be on
the same terms as the Loan, which will be used to secure the
site.
Whilst there is no certainty that it can be secured, a potential
site in Uintah County, Utah, USA, has been identified by Greenfield
that the Board believes has a number of key attributes that make it
attractive. These attributes include, inter alia, the required
infrastructure to enable construction to commence quickly, the
required permits, and the land containing appropriate resources.
Further announcements will be made in this regard as
appropriate.
Whilst the Board is confident that the upgrades to the POSP and
the associated trails and tests will demonstrate both the
commerciality of the processes used in the Oil Sands Technology and
that the proposed design for the commercial scale plant is suitable
to the recovery of oil from oil sands, in the event that the
outcome of the trials and tests are not as expected resulting in
the Company choosing not to proceed with the securing of a site,
the Company will consider its options with regards to the use of
the funds raised through the Placing for that purpose and/or
whether to continue to provide funding to Greenfield.
Admission
The Placing Shares will rank pari passu with the existing
Ordinary Shares and application will be made for the Placing Shares
to be admitted to trading on AIM ("Admission"). It is expected that
Admission will become effective and dealings in the 777,777,777
Placing Shares will commence at 8.00 a.m. on 30 November 2020.
Following Admission, the Company's issued share capital will
consist of 1,451,412,012 Ordinary Shares with voting rights. There
are no Ordinary Shares held in treasury. The figure of
1,451,412,012 may be used by shareholders, following Admission, as
the denominator for the calculations by which they will determine
if they are required to notify their interest in, or a change to
their interest in, the share capital of the Company under the
Financial Conduct Authority's Disclosure Guidance and Transparency
Rules.
Commenting, John Potter, CEO of TomCo, said : "I am delighted
that we have secured funding that, together with the multi-site
licence, will enable Greenfield to move to the next stage of
development.
"We are confident that the upgrades to the POSP and the
associated trials will demonstrate that the processes used at the
POSP can be scaled to a commercial level and will allow Greenfield
to move forward with finalising the FEED study.
"In addition, I am delighted that we have secured a multi-site
licence with Petroteq for the use of its Oil Sands Technology.
Coupled with obtaining funding to facilitate the securing of a site
for a future plant in the Uintah Basin, I believe TomCo is now very
well positioned.
"We look forward to the restart of the POSP and reporting on
further progress in due course."
Enquiries:
TomCo Energy plc
Malcolm Groat (Chairman) / John Potter (CEO) +44 (0)20 3823 3635
Strand Hanson Limited (Nominated Adviser)
James Harris / Richard Tulloch / Jack Botros +44 (0)20 7409 3494
Novum Securities Limited (Broker)
Charlie Brook-Partridge +44 (0)20 7399 9402
IFC Advisory Limited (Financial PR)
Tim Metcalfe / Graham Herring +44 (0)20 3934 6630
For further information, please visit www.tomcoenergy.com .
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END
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