The funds raised by the placement will be required to fund $1.25 million of the drilling costs for the first two wells to be drilled in the VIC/P54 permit, together with contingency funding for the testing of any successful wells and drilling cost overruns in the permit.

In addition funds will be used for an airborne gravity survey to be acquired in the NT/P66 permit, which will begin immediately, and ongoing exploration activities in relation to its other permits VIC/P56 and VIC/P39(v) in the Gippsland Basin.

An additional issue of three million fully paid ordinary shares and one million five hundred thousand options, exercisable at 20 cents each, in Karoon Gas has been stopped after receiving advice from the ASX.

The newly listed Karoon Gas Australia had agreed to issue the shares to Nexus in place of royalty obligations owed by Karoon to Nexus in respect of Exploration Permit 4537 and Petroleum Permit PEP 162.

However, the Australian Stock Exchange (ASX) made a determination, as part of Karoon’s ASX listing application, that the shares to be issued to Nexus would be subject to a 24 month escrow period during which they would be restricted from sale.

Consequently Nexus and Karoon have agreed to cancel the deal with Nexus retaining the 2% net profits royalty obligations.