Elixir Energy Ltd has expanded its position at the Grandis Project in the gas-rich Taroom Trough of Queensland by executing two farm-in agreements with a subsidiary of energy major Santos Ltd.
The farm-in with Santos secures Elixir a 50% Working Interest in two additional permits, ATP 2056 and ATP 2057, and adds a Contingent Resource (2C) of 1.1 trillion cubic feet equivalent (TCFE) of gas net to Elixir.
This has been certified by independent resource/reserve auditor ERCE Australia Pty Ltd and takes the company’s total 2C contingent resource in the Taroom Trough to 3.0 TCFE.
Supporting this farm-in and planned work is a capital raising of up to $9 million, which makes the deal highly accretive on a contingent resource per share basis.
Fantastic deal
Elixir’s managing director Neil Young said: “This highly accretive deal is a fantastic one for our shareholders.
"It adds significantly to our already very material contingent and prospective resources in the Taroom Trough, such that, even after the associated capital raising, the contingent resources owned on a per share basis have increased substantially.
"Our overall team has great experience in working for and with Santos, who we greatly respect as Australia’s premier onshore operator, and we look forward to expanding those long-term relationships.”
Taroom Trough location map.
Extension of BCG play
The acreage acquired contains an extension of the basin-centred gas (BCG) play that the company has proven in ATP 2044.
Additionally, it contains the more updip targets in this play that have been the subject of a very active drilling program in 2024 by another operator.
Elixir said the new blocks had obvious synergies with ATPs 2044 and 2077 and were a strong strategic addition to the Grandis Project.
Farm-in work programs
The farm-in will see Elixir fund and operate the programs for each licence, which for ATP 2056 is the drilling of a vertical well to 3,100 metres and for ATP 2057 is the acquisition of 200 kilometres of 2D seismic likely to occur in 2026.
These programs will meet the exploration commitments for the two licences with operatorship to then revert to Santos.
Elixir plans to drill the well on ATP 2056, which it has named Lorelle-3, in or around the third quarter of this year with final timing being subject to rig availability and the procurement of long lead items.
Lorelle-3 will be an appraisal well and the objectives will be to apply novel evaluation and testing techniques to, inter alia, determine the optimal section for the placing of a horizontal lateral.
A further objective is to measure the condensate content, which is known to be much higher west of the Daydream wells.
Elixir will immediately seek an extension of its current Advanced Finding for R&D tax credit purposes to cover the costs of this well.
Equity placement
An equity placement and subsequent shareholder placement for total capital-raising proceeds of up to $9 million will support the farm-in.
In the equity placement, the company received binding firm commitments to raise $7 million through the issue of 199,468,466 new shares to institutional and sophisticated investors at 3.5 cents per share.
This represents a 20.5% discount to the last close and a 16.3% discount to the 5-day VWAP. Each two new shares issued will receive an attached listed option of the class currently on issue.
The placement was strongly supported with demand in excess of the placement size and introduced a number of new institutional investors to the company’s register.
Taylor Collison Limited, Originate Capital Pty Ltd and MST Financial Services Pty Ltd acted as joint lead managers to the placement.
Shareholder placement
Elixir’s board will provide existing shareholders with some ability to participate in this capital raising on the same terms.
Shareholders as at the record date of February 10, 2025, will be invited to consider participating in a shareholder placement (SHP) on similar terms to a share purchase plan to raise up to $2 million.
Given that the SHP includes the issue of attaching options, this offer will be conditional on shareholder approval being obtained so as to entitle Elixir to issue the SHP shares and options under the ASX Listing Rules.