Botala raises funds for Serowe testing

Australian-listed Botala Energy is seeking to raise up to A$1.5 million to fund further gas flow testing, production activities and exploration drilling at its Serowe Coal Bed Methane Project in Botswana.

The company announced a share purchase plan on 9 November, offering eligible shareholders new shares at A$0.045 each.

The proposed fundraising follows a A$1.35 million share placement completed earlier this month, potentially bringing Botala's total capital raised to A$2.85 million before costs if the offer is fully subscribed.

Botala said the proceeds would support continued flow testing and production activities at its Pitse Pilot Project, priority exploration drilling and general working capital.

The fundraising comes as the company seeks to increase gas production from its Serowe-3.5B well, where continuous gas flow was established on 20 September.

Production has increased from about 1,500 cubic feet per day to 28,000 cubic feet per day, equivalent to approximately 30 gigajoules daily, according to the company.

However, output remains below the pilot project's target benchmark of 70 gigajoules per day, making further testing necessary to establish whether sustained commercial production can be achieved.

Under the share purchase plan, Botala intends to issue up to 33.33 million new ordinary shares. Eligible shareholders can apply for shares worth between A$2,500 and A$30,000.

The offer opens on 13 November and closes on 27 November, with the new shares expected to be issued on 4 December.

The offer is not underwritten and carries no minimum subscription requirement. Botala may also scale back applications if demand exceeds the available allocation.

The Serowe project is central to the company's ambition to establish a coal bed methane industry in Botswana, with the longer-term objective of supplying liquefied natural gas (LNG) to industrial customers in the region.

Botala reports independently certified contingent gas resources of 471 petajoules and prospective resources of approximately 7,542 petajoules across its Serowe interests.

The company has also signed a binding offtake letter of intent with South African steel producer Scaw Metals for up to 3.5 petajoules of LNG annually, with an option to increase volumes to 4.7 petajoules as production expands.

For now, the immediate priority is to demonstrate sustained gas production at the Pitse Pilot Project before committing to larger-scale development.

Botala has not specified how the proposed A$1.5 million will be divided between flow testing, exploration drilling and working capital. The final amount raised will depend on shareholder participation.