Coretrack Limited has received an overwhelmingly positive response to a proposed capital raising. Originally seeking up to $8 million, the capital raising was heavily oversubscribed and the Board subsequently resolved to accept an additional $2 million in oversubscriptions. Firm commitments have now been received to raise up to $10 million (before costs) via a placement of up to 58,823,528 ordinary shares at an issue price of 17 cents each ('Shares'), with a free attaching listed option ('Listed Option') on a one for four basis, exercisable at 25 cents each on or before 30 November 2012 (in the same class as the existing CKKOA listed options) ('Placement').

The Placement will be made under s708 of the Corporations Act to sophisticated and professional investor clients of joint lead managers Cygnet Capital Pty Ltd ('Cygnet Capital') and Paterson's Securities. The funds raised from the Placement will be applied towards the purchase of auxiliary equipment in order to get the GT3000 drill rig ready for oil and gas drilling, completion of modifications to the Company's Core Level Recorder System ('CLRS'), following on from its first 'infield' commercial trial, and for general working capital purposes.

The Placement will be undertaken in two tranches. Tranche 1, comprising 22,705,748 Shares, will be issued upon receipt of cleared funds, pursuant to the Company's existing 15% placement capacity. Tranche 2, comprising up to 36,117,780 Shares and up to 14,705,882 Listed Options will be issued following shareholder approval at a general meeting, to be held as soon as practicable.

Fees payable to brokers for the capital raising will be equal to 6% of the gross amount raised. In addition, on completion of the Placement and subject to shareholder approval, the Company has agreed to issue joint lead manager Cygnet Capital or its nominee(s) 4,000,000 Listed Options, exercisable at 25 cents on or before 30 November 2012 (in the same class as the existing CKKOA listed options).

Upon completion of the Placement, and subject to the approval of the Company's Chairman, Cygnet will also have the ability to appoint a director to the Board of Coretrack.

GT3000 update Following up from the recent market update provided on 3 March 2011, the Company is further strengthened in its view that it will be in a position to execute a commercial contract in the near future. In preparation for this commercial work, the Company intends to return the GT3000 drill rig to the Perth workshop for routine maintenance and set up and the Merredin test hole will be suspended.

The Company is still in commercial negotiations with a number of companies with a view to securing its first major contract.

Following the offshore trial of the CLRS with Woodside Energy Ltd in December 2010, the Company has made a further improvement to the CLRS in order to improve the tool's efficiency and effectiveness. Drawings of the new valve module are completed and the relevant components are being manufactured. The recent modifications constitute a technical simplification and are expected to vastly improve the tool's down-hole reliability. It is estimated that the CLRS technology will be ready for a final trial by the end of April/May 2011. Oil and Gas industry representatives (field operators) have indicated they are keen to see the technology proven and it is also expected that use of the CLRS will give coring service providers a significant competitive advantage in obtaining contracts.

Tags: Coretrack Limited