TIDMSOLO
RNS Number : 1505A
Solo Oil Plc
22 March 2017
FOR IMMEDIATE RELEASE, Embargoed until 7 am 22 March 2017
SOLO OIL PLC
("Solo" or the "Company")
Investment in Helium Project, Tanzania
and Subscription
Solo Oil plc (AIM: SOLO), the natural resources investment
company focused on acquiring and developing a diverse global
non-operated portfolio of strategic oil and gas assets is pleased
to announce that it has agreed to acquire a 10% interest in Helium
One Limited ("Helium One") for a total consideration of GBP2.55
million (the "Initial Investment"). Solo has also been granted a
90-day call option to increase its investment in Helium One by a
further 10%, for an additional investment of GBP4 million, which
would increase its stake to 20%.
The Company has additionally raised GBP1.2 million (gross) by
means of a Company arranged subscription (the "Subscription") with
institutional and private investors.
Highlights:
-- Initial Investment of GBP2.55 million for a 10% interest in
Helium One, by way of GBP1.2 million in cash and GBP1.35 million
through issuing new Ordinary Shares
-- Call option to increase interest in Helium One to 20% by a
further investment of GBP4 million by way of GBP2 million in cash
and GBP2 million through issuing new Ordinary Shares ("Call
Option")
-- Early entry into the global helium market estimated to be worth US$6 billion annually
-- Positive macro drivers for helium markets, driven by a
depleting supply and simultaneous demand growth, result in strong
pricing dynamics
-- Helium One's Rukwa Project in Tanzania has independently
estimated by Netherland, Sewell and Associates Inc. ("NSAI") to
contain unrisked most likely prospective recoverable helium volumes
close to 100 billion cubic feet ("bcf")
-- Expands Solo's existing presence in Tanzania which includes
gas production from Kiliwani North and a 25% working interest in
the Ntorya gas-condensate discovery
Neil Ritson, Solo's Chairman commented:
"Solo has successfully invested in bringing several gas projects
to market in Tanzania which are now reaching maturity from an
investment viewpoint. Given the related pricing of petroleum gas
and helium, which is globally in short supply, Solo has for some
time been investigating opportunities in the helium sector. Helium
One's portfolio of prospective helium projects in Tanzania provide
Solo with a unique early stage investment into a potentially
world-scale helium resource. The Company believes that Rukwa,
together with Helium One's additional project areas at Eyasi and
Balangida, represent an attractive strategic investment, especially
given the helium market's weak supply dynamics and continued demand
growth."
The global helium market is anticipated to see a sharp drop in
supply in the next five years as the US Strategic Reserve ceases
sales, and with helium's increasing use in modern life, such as MRI
scanners, Solo has identified Helium One's world-class assets in
Tanzania as a compelling and complementary investment for Solo's
portfolio of oil and gas investments. This transaction is
consistent with Solo's investing policy, utilises Solo's existing
skills base and further diversifies Solo's portfolio in Tanzania
where Solo has a proven track record.
Helium One is an independent specialist explorer focussed on
being a major supplier into the global helium markets estimated to
be worth approximately US$6 billion annually. The company benefits
from an experienced Board with extensive in-country and industry
experience. Helium One holds twenty-three Helium Prospecting
Licences in Tanzania, including licences over the Rukwa Project
with a most likely unrisked prospective recoverable helium volume
of 98.9 bcf (as reported by NSAI)."
Helium Markets
Global demand for helium is growing at a rate that is
outstripping supply, which presents a significant pricing
opportunity for future producers.
Helium supply is concentrated in only a few markets globally,
mainly Algeria, Australia, Russia, Qatar and the USA. The USA
dominated the market throughout the twentieth century, however,
with the US government's decision to relinquish control of its
assets, the majority of global helium production will come as a
by-product from other gas producing streams. Naturally occurring
helium rich assets present considerable advantages in meeting
growing market demand. Tanzania has been identified as a key
country for helium exploration based on the evidence of surface gas
seeps in the geological rift valleys adjacent to the Tanzanian
Craton, as well as its strategic location for global exports
through its deep-water port at Dar es Salaam.
The use of helium is essential in many modern industries,
ranging from cryogenics (including use in MRI scanners), to lifting
and electronic applications. As these industries grow, in
conjunction with many others, the demand for helium which has been
rising rapidly for the last decade is set to continue. Helium
cannot be readily substituted due to its unique properties being
inert, non-toxic, and lighter than air and with an incredibly low
boiling point of minus 269 degrees centigrade (just 4 degrees above
absolute zero).
Details of Investment
Initial Investment
The Initial Investment is for 10% of the post-money issued
capital of Helium One. The consideration totalling GBP2.55 million
is comprised GBP1.2 million in cash and GBP1.35 million payable by
the issue to Helium One of such number of fully paid ordinary
shares in Solo ("Consideration Shares") at a Solo share price equal
to the five trading day VWAP immediately prior to the issue of
those shares. The Consideration Shares will be issued subject to
the terms of a standard orderly market agreement and admission to
trading on AIM. The cash element payable by Solo is being funded by
the Subscription as set out below.
Upon closing of the Initial Investment the Company shall grant
to Solo the right to subscribe for one share for every one share
subscribed for under the Initial Investment at a price of US$0.40
per share for a period of 2 years from the date of grant.
Call Option
On completion of the Initial Investment, Solo will be granted a
90 day call option to subscribe for such number of shares as will
give to Solo, in addition to its existing 10% shareholding, a fully
diluted percentage shareholding in Helium One on the date of
exercise of the option of 10% of its issued share capital (the
"Call Option"). The Call Option exercise price shall be payable as
to GBP2.0 million in cash and GBP2.0 million by the issue to Helium
One of such number of fully paid ordinary shares in Solo ("Option
Consideration Shares") at a Solo share price equal to the five
trading day VWAP immediately prior to the issue of those shares.
The Option Consideration Shares will be issued subject to the terms
of a standard orderly market agreement and approval by general
meeting of shareholders for appropriate share authorities.
Upon exercising the Call Option Helium One shall grant to Solo
the right to subscribe for one share for every one share subscribed
for under the Call Option exercisable for a period of 3 years from
the date of grant with an exercise price of US$0.70 per share.
Further Information on Helium One
Rukwa is Helium One's most advanced asset and is actively being
developed with the objective of installing a world scale helium
production facility. The Tanzanian projects differ from most global
resources as the helium is highly concentrated and associated with
nitrogen, whereas typically helium occurs in very low
concentrations and is a credit to hydrocarbons or carbon dioxide.
Sampling and analysis conducted by Oxford University on behalf of
Helium One has confirmed the presence of a high concentration
helium-nitrogen system at Rukwa. In the United States, analogous
(though low-volume) high helium-nitrogen fields have been
successfully produced. Using seismic and data from earlier oil
exploration, Helium One have identified numerous trapping
structures with suitable reservoir and sealing formations for
helium accumulation. Newly acquired soil gas geochemistry data has
confirmed the helium accumulation potential in many of these
structures. Studies have also been completed on process plant
engineering design and routes to market including logistical
analysis of transporting containers of liquid helium from site to
world markets. The 2017 exploration program includes further soil
geochemistry, an airborne gravity survey and an infill seismic
survey. Following interpretation of these results Helium One
expects to commence drilling at Rukwa in 2018. At the date of the
transaction Helium One has not published any accounts.
Details of the Subscription and Consideration Shares
The Company has today raised GBP1,200,000 (before expenses) with
institutional and private investors through a Company arranged
subscription (the "Subscription") of 222,222,222 new ordinary
shares of 0.01p (the "Subscription Shares") at a price of 0.54p per
Subscription Share (the "Subscription Price") representing
approximately 3.0 % of the issued share capital prior to Admission
of the Subscription Shares. The proceeds will be used to fund the
Initial Investment cash consideration.
Helium One will additionally be issued 236,842,105 shares based
on the calculated five trading day VWAP of 0.57p per Consideration
Share.
The Subscription and Consideration Shares are subject to
admission of the Subscription Shares, which when issued will rank
pari passu with the existing Ordinary Shares in issue, to trading
on AIM.
Application for Admission and Total Voting Rights
Application will be made for the 459,064,327 Subscription and
Consideration Shares to be admitted to trading on AIM
("Admission"). Admission is expected to occur at 8.00 a.m. on
Tuesday 28 March 2017. The Subscription is conditional on Admission
and the Subscription Shares will, on Admission, rank pari passu
with the Company's existing ordinary shares of 0.01p each
("Ordinary Shares"). Following the issue and Admission of the
Subscription and Consideration Shares, the Company's share capital
will comprise 7,846,756,009 ordinary shares of 0.1p each.
The above figure of 7,846,756,009 Ordinary Shares may be used by
shareholders in the Company, following the Admission of the
Subscription and Consideration Shares, 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 and Transparency Rules.
Market Abuse Regulations
The Market Abuse Regulation ("MAR") became effective from 3 July
2016. Market soundings, as defined in MAR, were taken in respect of
the Fundraise with the result that certain persons became aware of
inside information, as permitted by MAR. That inside information is
set out in this announcement and has been disclosed as soon as
possible in accordance with paragraph 7 of article 17 of MAR.
Therefore, those persons that received inside information in a
market sounding are no longer in possession of inside information
relating to the Company and its securities.
Qualified Person's Statement:
The information contained in this announcement has been reviewed
and approved by Neil Ritson, Chairman and Director for Solo Oil
plc, who has over 38 years of relevant experience in geology,
resource estimation and the oil and gas industry. Mr. Ritson is a
member of the Society of Petroleum Engineers (SPE), an Active
Member of the American Association of Petroleum Geologists (AAPG)
and is a Fellow of the Geological Society of London (BGS).
A presentation providing further details on the transaction will
be made available on Solo's website: www.solooil.co.uk
For further information:
Solo Oil plc
Neil Ritson / Dan Maling +44 (0) 20 3794 9230
Beaumont Cornish Limited
Nominated Adviser and
Joint Broker
Roland Cornish +44 (0) 20 7628 3396
Shore Capital
Joint Broker
Jerry Keen
Beaufort Securities
Joint Broker
Jon Belliss
Buchanan (PR) +44 (0) 20 7408 4090
Ben Romney / Chris +44 (0) 20 7382 8300
Judd +44 (0) 20 7466 5000
Notes to Editors
Helium is used in hi-tech applications such as MRI scanners
(currently the largest application for helium), semiconductor and
optical fibre manufacturing, computer hard-drives, in the nuclear
and space industries, and for lifting, such as Lockheed Martin's
LMH1 hybrid airship. With around 57% market share, the US is the
dominant supplier. However, the US Bureau of Land Management (BLM),
which manages the world's largest helium reserve, is auctioning off
an increasing percentage of the reserve annually until it falls to
3.0 bcf or until 30 September 2021, when commercial sales will
cease. After that point the BLM will only supply US government
users, creating a supply shortage which will force industrial
consumers to look for other sources of helium. This transformation
of the industry has resulted in recent bulk helium prices as high
as US$200 per thousand cubic feet ("mcf"), and a domestic USA
helium supply that is increasingly leveraged to primary CO(2)
producing fields.
Further information on the contents of this announcement can be
found at www.solooil.co.uk and at www.helium-one.com
Glossary:
bcf billion cubic feet
---- ----------------------------------
mcf thousand cubic feet
---- ----------------------------------
MRI magnetic resonance imaging is
a technique that uses a magnetic
field and radio waves to create
detailed images of the organs
and tissues within your body
---- ----------------------------------
This information is provided by RNS
The company news service from the London Stock Exchange
END
ACQMMGZFMZGGNZG
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