Magnum Gas & Power Limited has announced a Share Purchase Plan (SPP), a move that will provide shareholders with an opportunity to increase their holding in the company which rairing funds for Botswana and Australia projects.

Under the SPP, eligible shareholders will be able to purchase up to $15,000 worth of additional shares in the company at 1.2 cents without incurring brokerage or other transaction costs.

“This represents a 33% discount to the market price at close on the record date of 22 October 2013 and a 15% discount to the volume weighted average price of the past five trading days prior to announcement.”

Eligible shareholders include those registered as at 5pm WST on 22 October 2013 with a registered address in Australia and New Zealand. It is the intention of Directors to raise up to a maximum of $1,500,000 through the issue of 125,000,000 shares. According to Magnum Gas & Power, the Share Purchase Plan proceeds will principally be directed towards advancing the company’s Botswana and NSW projects and for general working capital.

Magnum has recently completed a successful exploration programme in Botswana and is currently engaged in testing and analysis work, the results from which will provide the company with data to support prospectivity and basin models, including information on gas properties such as gas content and composition.

The company recently announced very positive initial results which confirmed a high percentage of methane in the gas composition, results from the testing and analysis will be completed and released over the coming months. The next phase of exploration drilling is now being planned with a number of prospective target areas identified.

Encouragingly several major CBM exploration programmes are underway in the basin being carried out by significant peers, including Kubu Energy (Sasol and Origin Energy joint venture), Exxaro and Tlou Energy.

In Australia, Magnum retains a significant interest in a number of licence areas in New South Wales. While these projects have been essentially at standstill for some time due to state and federal politics, Magnum believes in the project fundamentals (the acreage has existing reserves, is near existing infrastructure and sits in a region with a looming energy crisis) and is waiting for a defined process from the government to enable planned operations to be approved and recommence.

“The company is pleased by the recent change in rhetoric from the Federal and NSW Governments and we are particularly encouraged by NSW Resources and Energy Minister Chris Hartcher’s invitation to former federal resources minister Martin Ferguson to broker a breakthrough in the crisis in natural gas supply that is threatening the state,” said the company. “Mr Ferguson said he would personally drive the push to remove impediments to gas extraction in NSW.”

Magnum said new shares under the SPP will be offered at 1.2 cents which is a discount to the volume weighted average price of shares traded over the previous 5 days prior to this announcement of 15% and to the market price at close on the record date of 33%.

The issue will be limited to 125,000,000 shares to raise a total of $1,500,000. However, should demand exceed this amount, the directors reserve the right to accept over subscriptions or to scale back applications in their absolute discretion.

The maximum number permitted by the ASX Listing Rules is 30% of the pre offer issued capital (ASX listing rule 7.2).

The application form should be completed and returned with payment before 15 November 2013. There is provision for shareholders to make a BPay payment and in this instance the application form does not need to be returned.