The Brisbane-based company said the funds, raised via the placement of 39.9 million shares at $1.10 each to sophisticated investors, would pay for the project's first commercial development phase.

Managing director Tony Gilby said the placement together with existing cash reserves and proceeds from last week's sale of the UK assets meant Sunshine had $90 million to fund this year's work program.

Sunshine is also planning to start front-end engineering and design work on its Queensland LNG project before the end of the month.

Sunshine's 500,000 tonne per annum scheme is the smallest and least publicised of Gladstone's coal seam methane-to-LNG projects, but managing director Tony Gilby says it could sneak under the radar to become the first such development to enter production.

"Our proposal differs from the others, primarily because it is an affordable size," he told Petroleum magazine recently.

"Because we have a modest objective for out first train, we are confident of getting first deliveries by 2011 or 2012."

Once Train 1 is up and running, Sunshine and partner Sojitz, a Japanese major with experience in LNG, will consider expanding the project. Indeed, they have already prepared for a possible expansion by building a larger tank than is initially required.

"This is the longest lead item and also the most expensive," Gilby said.

"So we'll build it to accommodate and expansion, which as a result could happen very quickly.

"We're very comfortable with how the project is evolving. We're going into FEED soon with a view to making a final investment decision at the end of 2008."

The plant would be supplied from the company's Lacerta coal seams in the Surat-Bowen Basin, but the partners are already discussing using gas from other Sunshine permits to supply feedstock for additional trains. In addition, other CSM producers could one day sell gas into the project.

"Ultimately there will be an opportunity for other, smaller companies to sell into the LNG market, where could aggregate the reserves and take a small fee on the way through," Gilby said.

Under the heads of agreement, Sojitz would have a 70% operating stake in the LNG plant, with the remainder held by Sunshine Gas. Gilby said Sojitz was also considering taking up to a 20% upstream stake in Lacerta.