The coal seam methane producer is offering up to 91 million shares, or about 20% of Molopo’s current issued capital, at 3.7c per ordinary share, a 15.9% discount to the company’s closing share price yesterday.

Molopo said the proceeds raised will be used to provide working capital and help fund one or more horizontal wells in the Mungi field in the Bowen Basin.

It said these are aimed at both increasing cash flow and testing and refining the design of new horizontal wells.

The funds will also be used to complete production test wells at the Harcourt/Bindaree field and the Timmy field, both in Queensland, as well as resuming production testing at Gloucester in New South Wales.

Exploration and appraisal of new projects in South Africa will also be pursued as will a production test well in the shallow sandstones of the West Virginia gas project in the United States, it said.

Molopo directors with entitlements to the share purchase plan said they intend to take up their entitlements and reserve the right to place any shortfall.

The at-not-cost offer is capped at $5000 and is due to close on December 22.