The Leigh Creek Energy Ltd [ASX:LCK] share price is down today after raising $18 million.
Leigh Creek’s flagship project is the Leigh Creek Energy Project, located in South Australia, about 550km north from Adelaide.
Their main objective is to produce urea from syngas (synthetic gas), which it will produce from a former coalfield.
Urea is used to provide nutrients (fertiliser) to farmed land. Most of the urea in Australia comes from abroad, and Leigh Creek is planning to produce fertiliser to supply locally, as well as exporting it.
Using syngas to produce fertiliser
Leigh Creek announced today they’ve raised $18 million. The money will be used to progress the Leigh Creek Energy Project towards production of commercial syngas, along with generating power.
According to Leigh Creek, they will use $1 million for getting a 3D seismic, $6.5 million for drilling and building gasifier chamber, another $6 million for power generation infrastructure, and the remaining $4.5 million for general working capital.
Leigh Creek’s Managing Director Phil Staveley said:
‘This $18 million capital injection will enable LCK to continue to move forward with Stage 1 of our flagship project with added confidence and puts us one step closer to our goal of building a plant at Leigh Creek which can deliver urea into the Australian and overseas markets.
‘In the coming weeks we expect to execute the final agreement for engineering, procurement, construction and completion of the urea plant with Korean giant, DL E&C and offer further equity to our existing, loyal shareholders.’
What’s the deal with LCK Share Price?
The placement will be issued at 18 cents a share. This is a 20% discount from when shares last closed on Thursday before Leigh Creek went on a trading halt. The placement also comes with an unlisted option, exercisable at 28 cents within the next three years. This is subject to shareholder approval.
Leigh Creek said the placement counted with the support of several Australian and global institutions.
At time of writing Leigh Creek’s shares were trading 17.4% lower from the last close, at 19 cents.
Of course, energy projects involving coal are quite controversial at the moment with the renewable energy transition gaining ground.
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