Range signs up a Puntland partner Jamie Freed January 24, 2007
RANGE Resources said yesterday it had finalised a joint venture that could hand control of 80 per cent of its main oil and gas project in Somalia's semi-autonomous state of Puntland to a little-known Canadian company.
Canmex Minerals, a company with a $C60 million ($64.7 million) market value on Toronto's Venture Exchange, has agreed to spend $US50 million ($63.4 million) on exploration within three years in exchange for an 80 per cent interest in Range's two main oil prospects, pending Canadian regulatory approval and final documentation.
If Canmex can begin commercial production in Puntland - which has never produced any oil or gas - it will pay Range another $US3.5 million. Otherwise, Range simply avoids spending any of its own money on exploration until the $US50 million limit is reached.
Range struck the deal with Canmex after a more favourable provisional agreement with the Korea National Oil Company fell through last year.
Under the terms of the Korean deal, Range would have received a $US10 million sign-on fee and the Koreans would have earned 75 per cent of the area after spending at least $US25 million in two years.
A Canmex representative in Vancouver could not comment on the deal yesterday because it was not expected to be announced to the Toronto Venture Exchange until early this morning.
But Canmex's latest accounts reveal the company had only $C3.5 million of cash on hand at the end of September. It has not publicly stated where it will raise the $US50 million of exploration funds needed. Canmex stock is relatively illiquid; since October there have been several days when not a single share changed hands. It also does not appear to have a company website.
In an announcement to the Australian Stock Exchange yesterday, Range said it had appointed a UK broking house specialising in natural resources in emerging markets to proceed with a listing on London's Alternate Investment Market. Range said it would need to raise a minimum $US20 million in an institutional placement as part of the listing, but did not specify why the funds were needed.
Range representatives were not available for comment yesterday, but in a statement, managing director Mike Povey said in Canmex it had "found an ideal partner to aggressively progress the exploration effort".
Range Resources shares closed 0.2c, or 6 per cent, lower at 3.2c yesterday.
RRS Price at posting:
0.0¢ Sentiment: Buy Disclosure: Held
