PERTH (miningweekly.com) – ASX-listed gold and cobalt explorer High Grade Metals (HGM) has announced a move into the coal seam gas (CSG) sector.
HGM on Tuesday announced that it had inked a binding agreement to acquire unlisted Jade Gas, which holds a 60% interest in a joint venture (JV) vehicle with Mongolian State-owned enterprise Erdenes Methane, which in turn holds a production sharing agreement with the Mineral Resources and Petroleum Authority Mongolia, to explore and exploit CSG over the Tavan Tolgoi coalfield.
Under Jade’s investment agreement with Erdenes, the company must sole fund the project towards a completion of a definitive feasibility study, at which time both parties would continue to fund the project on a pro rata basis.
As part of the transaction, HGM will undertake a five-for-one share consolidation prior to issuing more than 826.1-million ordinary shares to the shareholders of Jade.
HGM will also issue 68-million options, with a four-year term and a strike price of 4.5c each.
The transaction would be subject to a number of conditions, including a due diligence and regulatory and shareholder approvals. Furthermore, HGM would also need to re-comply with the ASX listing rules.
As part of the re-compliance process, the company will issue a prospectus with the aim of raising up to A$6-million through the issue of shares at a price of 3c each, post the proposed share consolidation.
Meanwhile, HGM on Tuesday also announced the appointment of Dennis Morton as a nonexecutive director to the company’s board.
Morton is a geologist with substantial oil and gas industry experience and is the founding CEO and MD of Eastern Star Gas, which was acquired by major Santos in 2011.
The appointment was made in advance of the anticipated acquisition of CSG projects, HGM said.