The company has already raised more than $4 million of the proposed funds by placing 10% of its total issued capital at 22.5c per share to a subsidiary of London-based Cambrian Mining Group.

Under the same terms, a share placement and non-renounceable pro-rata rights issue will be offered to existing shareholders to raise the remaining $8.7 million.

Methanol Australia managing director Chris Hart said the funding strategy was attractive because it allowed the company to advance the exploration and appraisal of NT/P68 while retaining 100% of the permit.

“NT/P68 has been reviewed by a number of large international companies over the past 12 months,” he said.

“These reviews led to discussions of farm-in terms and it became clear that terms would involve the assignment of a significant interest in the permit and did not provide certainty of gas supply to the approved methanol and LNG projects.”

Hart said Methanol Australia was currently finalising a deal with PGS Australia to acquire and process about 410 square kilometres of 3D seismic data over the crest of the Epenarra structure in NT/P68 during September using the M/V Orient Explorer.

Subject to confirmation by appraisal drilling, Hart said the potential gas resource at this location could underpin its proposed Tassie Shoal LNG project.

“The company believes NT/P68 has the potential to host a substantial gas accumulation at Epenarra and possibly other significant accumulations that may collectively support the future gas demands of its proposed gas processing projects,” he said.

The Epenarra structure has an estimated in-place gas resource of 5.6 trillion cubic feet. It is a broad, flat anticline at the Darwin Formation level with a mapped closure of about 1200sq.km.

The Heron-1 well, drilled by ARCO in 1972, recorded several interpreted gas-bearing zones, including a 50m fractured carbonate interval in the lower section of the Darwin Formation.

Studies indicate that the gas quality at this level may be low in carbon dioxide with the possibility for attractive levels of associated condensate, according to Methanol Australia.

The 3D seismic program is designed to identify the density, distribution and orientation of faults and fracturing within the 50m gas-bearing zone intersected by Heron-1 and determine the optimum location for an appraisal well to test the productivity of this interval.

Drilling is planned for late 2007.

Two weeks ago, the company announced it had awarded a significant seismic contract to Compagnie Generale de Geophysique Group (CGG) to acquire about 600 line kilometres of infill 2D seismic over the Blackwood lead in NT/P68, also to take place during September.

The new seismic data will improve the structural mapping of this lead and is expected to elevate it to prospect and drill-ready status, Hart said.