Strata-X Energy Ltd. said it has signed a Non-Disclosure Agreement (NDA) with the Botswana Development Corporation (BDC) to develop a multi-staged USD$10 million financing strategy for the 100% Strata-X owned, Serowe CBM Project in the Republic of Botswana. Strata-X and BDC are committed to bring the domestically sourced, Serowe CBM Project’s clean natural gas to help stimulate the Botswana economy. BDC is the principal agency for commercial and industrial development within Botswana.
It is a government sponsored agency administered by an independent board of directors, with the primary charter to advance the country’s economy through financial support of nationally important projects.
BDC provides both debt and equity financing for domestic projects that perform one or more of the following functions: Pioneer new industries; Unlock value in existing industries; stimulate private sector growth and foster linkages with the local industry; drive diversification and exports and create significant employment.
Strata-X’s Serowe CBM Project is located in the heart of the Botswana CBM Fairway. As previously announced and as verified by MHA Petroleum Consultants, the Serowe CBM Project has an estimated 6 TCF of Prospective Gas Resource within the coal seams underlying Strata-X’s 100% owned tenements that extend over 1.1 million acres of the Fairway.
The natural gas from the Serowe CBM Project has the potential to change the makeup of the Botswana and southern African region energy mix and fits well with BDC’s mandate to help diversify domestic energy sources.
The Company is in the final stages of an Environmental Impact Assessment (“EIA”) which will allow the company to drill an additional 75 wells above the 20 wells currently approved, over the internally mapped high-grade area. Successful development of the domestic natural gas of the Serowe CBM Project allows Botswana access to cleaner and more sustainable energy, as opposed to its current use of 100% imported diesel and coal for regional power generation.
The proposed funding will incorporate both equity and debt funding of up to US$10 million over the next three years. Such funding would not preclude the Company from accessing other sources of capital.
The NDA was executed to allow BDC to review in detail the company’s Serowe CBM Project and business models including proprietary data. BDC is under no firm obligation to provide funding to the Strata-X but has agreed that, pending expected successful due diligence, it anticipates entering a long-term, multi-stage finance package with the company.
The due diligence is expected to take between 60 to 90 days and any proposal that results from the due diligence will require approval by both the BDC and the Strata-X Board of Directors.
Ron Prefontaine, Executive Chairman said: “We are excited to be partnering with BDC, the leading development fund in Botswana, as a potential significant cornerstone investor in our 100% owned Serowe CBM Project. Strata-X’s team has been working hard over the past two years, with limited resources, building the foundations for this large CBM Project. With 6 TCF Prospective Resource verified, our 100% owned Serowe CBM Project could dramatically change the Botswana energy mix and ultimately lead to Botswana being an important energy center of the southern African region.