This move will make the US investor the second largest shareholder in Po Valley, the gas junior said.

“The funds will allow us to drill the new Pandino development field and drive the other fields towards commercial production,” Po Valley chief executive Michael Masterman said.

Po Valley is also stepping up its European drilling operations, with confirmatory testing at Santa Maddelana, originally scheduled for late October, to begin today and run for 12 days.

A drill rig has started initial operations at Sillaro, with spudding of the Sillaro 1 deviation due to begin next week, Po Valley said.

Following Sillaro, the company said testing of Vitalba would commence.

Under the capital raising, Po Valley expects to place 12.5 million ordinary shares at 70c each with Harbert before the year’s end.

The first allotment of 10.5 million shares will be issued this month, followed by a further 2 million shares, subject to shareholder approval, after an Extraordinary General Meeting in December.

The total placement would give Harbert – which has a diversified investment portfolio totaling US$4.7 billion in capital and assets - a 15% stake in Po Valley’s enlarged share capital of 82.5 million shares, the company said.

“The placement to Harbert at a 50% premium to the Company’s current market price sends a clear signal of confidence to equities markets about the quality of our assets, and the status of our current exploration and development programs,” Masterman said.

Po Valley listed on the ASX last year and before the Harbert placement, had 70 million shares on issue.

The company has four gas field development projects, and exploration interests, in the Po River Valley - the main gas production zone in Italy - which hosts an estimated 105 billion cubic feet of proven and probable gas reserves, it said.

Harbert, which primarily invests in real estate, private capital and public securities, has grown its funds from US$1.5 billion in 2002 to US$4.7 billion by the September quarter this year, Po Valley said.