The coal seam methane producer today said it placed 65.85 million shares at 4.1c per share, to raise the $2.7 million from a small number of sophisticated and professional investors.

Molopo said the proceeds will be used to contribute to its horizontal production well program in the Mungi field in the Bowen Basin.

The program is aimed at both increasing cash flow and testing and refining the design of new horizontal wells, it said.

The company will also complete production test wells at the Harcourt/Bindaree and Timmy fields, both in Queensland, and resume production testing at Gloucester in New South Wales, including additional cored and production wells.

Production testing of vertical wells and at least one horizontal well in Liulin in China’s Shanxi province will be pursued, as will a production test well in the shallow sandstones of the West Virginia gas project in the US.

Molopo said it would also explore and appraise new projects in South Africa, subject to the approval of licence applications in areas in that country, where gas is currently “blowing” from old mining core holes.

The Melbourne-based company said the funds would also go towards general working capital.

The money will be received and shares allotted early next week, it said.