The equity line serves as an alternative to the standard debt facility, placement or convertible note style of financial instrument, with the Cornell offer combining the features of a traditional share placement with some of the flexibility of a banking line of credit.
Under the facility the company may draw down funds by the issue of shares to Cornell at any time over the life of the contract, giving the company complete control of the timing and amount of the draw-downs.
Jackson Greeve partner John Greeve said the greatest attribute of the product was in its flexibility and the absence of nonusage fees or hidden costs.
"A company will be able to drawdown on the equity line at any time by simply giving us a share placement based on the average price of the shares over the next five day trading period.
"Then as the company grows it can also increase the size of the facility."
QGC and Cornell have agreed to waive the $120,000 limit per draw-down for the second tranche, allowing shares to the value of $135,000 to be issued for this second draw-down.
The shares were issued at a 3% discount to the lowest daily volume weighted average price of QGC's shares traded on the three days from December 3.
In late November the company issued 618,557 shares to raise $120,000 in the first of a series of draw-downs to raise a total of $390,000 to fund the purchase of increased holdings in three tenements in the Surat Basin - ATP610P, ATP648P and ATP620P.
Cornell has set a minimum market cap of around $10 million for prospective clients, offering equity lines from around $8 million up to $250 million.
"Although there are few restrictions on which companies Cornell may invest in we do conduct reasonable levels of due diligence. By using the Cornell facility we would expect to see some appreciation in the company value which will be of benefit to shareholders and make the company more attractive for future investors."
QGC was Cornell's first ASX listed client securing an $8 million facility.
QGC's managing director Richard Cottee said the new source of funding provided the company with the financial strength to achieve the commercialisation of the coalbed methane resource in Queensland's Surat Basin.
A recent deal with Minerals Corporation (MSC) represented the 3rd placed by Cornell on the ASX with Jackson Greeve in negotiations with another seven companies.
MSC secured a $10 million facility with Cornell to use as working capital on the recently acquired Skardon River Kaolin Project at Cape York, Queensland.
The previous owners had spent over $120 million building an advanced processing facility, which due to operator errors had broken down during commissioning, essentially putting the owners into insolvency.
Minerals Corp acquired the project and has raised over $30 million since June 2000 and has now successfully proven the resource which has an expected mine life of over 100 years.
The placement facility with US based Cornell Partners provides the working capital needed for Mineral Corp to fully execute its business plan, and allows Minerals Corp to draw funds as required at prevailing market prices.
"This aspect " says Vic Alexander, Minerals Corp general manager, "is most important to us as our share price has languished in 2003 due to the continuing difficulties of raising monies when we needed it.
"As we progress the project we would expect our share price to be significantly re-rated. The key advantage of the Cornell agreement is we have the security of the $10 million being in place without the dilution of our capital base as would be the case with straight institutional placement at current prices".
"We can now push ahead and complete this project and we have already identified and have partly proved our next major new kaolin project in WA which will be a $100 million investment," said Alexander.
