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| The new funds are primarily earmarked for accelerating work on the XX block in Mongolia |
It has already received commitments to subscribe for 13,640,203 placing shares, raising approximately US$28.4 million. The group will also issue up to 8,843,675 new shares through direct subscriptions.
In addition to the fundraising, the European Bank of Reconstruction and Development (EBRD) which at the end of 2009 took 17.5 percent stake in the company for a US$6 million investment, will have the right to subscribe to as many shares as required to maintain its stake in Petro Matad.
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The EBRD is able to subscribe for all or part of its entitlement and its right to subscribe on these terms will expire on 11 October 2010. A further announcement of the EBRD's intention will be made by the Petro Matad in due course
Regarding the accelerated exploration of block XX, the group now intends to test all wells in its three well programme instead of the single test that was previously budgeted in 2010. Weather permitting, Petro Matad plans to drill a fourth well in Davsan Tolgoi in 2010.
The group also plans to immediately commission further seismic surveys in other parts of Block XX. Priority will be in the southern portion of the block, where other sub-basins have been previously identified and partially explored. In addition, supplementary exploration of the other leads and prospects outlined in the northern part, adjacent to Davsan Tolgoi, will be commenced.
Some of the funds will be applied to accelerated and additional exploration on Blocks IV and V with extra 2D seismic surveying and stratigraphic borehole drilling. In addition, other exploration opportunities in Mongolia will be assessed and if promising, pursued.
Petro Matad CEO Douglas McGay commented: "The proceeds from the share issue will allow us to increase the momentum of the company's drilling programme on Davsan Tolgoi, and to enable value to be added to the results of that programme with further tests, studies and appraisals. It will set the stage for further development.
"Just as importantly the proceeds will give the resources to our professional exploration team to build and accelerate their activities on the other areas of interest that our company is exploring with its partner, the Government of Mongolia. The remainder of Block XX and Blocks IV and V in central Mongolia will now benefit from more detailed exploration programmes, carried out even faster,” he added.
Petro Matad is the parent company of a group focused on oil exploration, as well as future development and production in Mongolia. The group holds the sole operatorship of three production sharing contracts with the government of Mongolia. The principal asset is the PSC for Block XX, a petroleum block of 14,250 square kilometres in the far eastern part of the country. The two other blocks, IV and V are located in central Mongolia and jointly cover 71,040 square kilometres.
source: http://www.proactiveinvestors.co.uk
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