Kinetiko Energy Ltd (ASX:KKO) has boosted its finances to progress gas developments in South Africa to the tune of A$5 million thanks to a placement with South African energy investment company Phefo Power.
The strategic raise saw Phefo subscribe for around 56 million shares at 9 cents each — a 3.2% discount to Kinetiko’s last closing price.
Phefo was first connected to Kinetiko in April this year after it committed to seed ZAR10 million in funding.
Fast forward to today and KKO said this placement represented the largest investment by private South African institutions to date and showcased strong domestic support.
The cash injection will accelerate exploration and grow gas resources as Kinetiko works to provide a major energy solution for South Africa.
Targeting energy paucity in South Africa
Kinetiko CEO Nick de Blocq said: “This is a very positive and exciting step as we continue to attract South African investment into Kinetiko.
“As communicated to the market, we have been focused on ensuring that the next substantial equity investment would come from indigenous sources and this placement continues our strong momentum shown throughout 2022.
“We now expect increased interest to follow the Industrial Development Corporation of South Africa (IDC) and Phefo Power’s active votes of confidence in our wider project, and the huge potential we have to become a substantial part of the solution to the energy paucity in South Africa.
“We are primed to continue our efforts, but having compatriots walk the path with us, along with our shareholders, is something to be proud of.”
Kinetiko will use the funding to support its immediate exploration program, with plans to drill seven core wells well underway.
Funds will also contribute to the company’s joint venture obligations with the IDC, which involves co-developing a gas production field.
The field will comprise up to 20 wells and is scheduled for development from the first half of 2023.
Placement details
Kinetiko will release 56.6 million fully paid ordinary shares to Phefo under its existing placement capacity.
The new shares will be issued in two tranches, the first of which (comprising 37.5 million shares) is expected to settle on Friday, October 28.
The remaining 19.1 million shares should vest in a second tranche on Wednesday, November 30.
Placement option
In addition to the placement, Kinetiko has granted Phefo an option to subscribe for a further 30 million of fully paid ordinary shares.
The price will be the greater of two options — the 14-day volume-weighted average of the company’s shares at the time the option is exercised or A$0.09.
This option expires on February 28, 2023.