Reconnaissance Energy Africa Ltd. (“ReconAfrica”), a Canadian oil and gas company listed on the TSX Venture Exchange (TSXV: RECO), OTCQX (RECAF), and Frankfurt Stock Exchange (0XD), has successfully concluded its previously announced underwritten public offering. The offering raised C$35 million, with the total proceeds amounting to approximately C$38.8 million, including the partial exercise of the over-allotment option.
A noteworthy component of this financial milestone is the equity investment from BW Energy Limited (OSE: BWE), amounting to C$22 million (approximately US$16 million). This investment is part of the partnership between BW Energy and ReconAfrica, signifying a robust commitment to the exploration and development activities of the Company.
The underwriting agreement, finalised on 18 July 2024, saw Research Capital Corporation act as the lead underwriter and sole bookrunner. The syndicate of underwriters also included Canaccord Genuity Corp. and Haywood Securities Inc. Collectively, these institutions facilitated the issuance of 30,944,000 Common Shares and 31,844,600 Warrants. Each Unit issued consists of one Common Share and one Warrant, with the Warrants set to commence trading on the TSXV under the symbol “RECO.WT” on or around 6 August 2024, subject to final TSXV approval.
The Warrants, which allow the acquisition of one Common Share at C$1.75, are valid until 31 July 2026. Notably, an acceleration clause is embedded within the Warrant terms. Should the moving volume-weighted average trading price of the Common Shares reach or exceed C$3.70 for 20 consecutive trading days, the Company reserves the right to accelerate the expiry date of the Warrants, provided a 10-business day notice is issued. This would result in a new expiry date 30 days from the notice, potentially expediting shareholder returns.
Proceeds from the offering are earmarked for a range of critical activities, including drilling operations, site mobilisation and demobilisation, geological and geophysical assessments, as well as 3D seismic planning and acquisition. These funds are integral to advancing the Company’s exploration initiatives within the newly discovered Kavango Sedimentary Basin, situated in the Kalahari Desert across northeastern Namibia and northwestern Botswana. ReconAfrica holds petroleum licenses covering approximately 8 million contiguous acres in this promising region.
The underwriters received a commission of 6.0% of the gross proceeds from the offering, with variations applied to purchasers and president’s list participants. Additionally, the underwriters were issued 943,244 broker warrants, entitling them to acquire Common Shares at C$1.25 until 31 July 2026. An advisory fee of $8,835, alongside 6,300 advisory broker warrants, was also disbursed.
In a related transaction, directors of ReconAfrica participated in the offering, acquiring 26,000 Units. This insider participation, constituting a “related party transaction” under Multilateral Instrument 61-101, was exempt from formal valuation and minority shareholder approval due to the minimal proportion of the Company’s market capitalisation involved.
ReconAfrica remains steadfast in its commitment to environmentally and socially responsible practices, aligning with international standards to minimise habitat disturbance in all operational areas.
As the Company progresses, it continues to navigate the intricate landscape of oil and gas exploration with a focus on sustainable development and partnerships, positioning itself as a formidable entity within the industry.
Cautionary Note Regarding Forward-Looking Statements: This article contains forward-looking statements that reflect ReconAfrica’s current beliefs and expectations regarding future events. These statements are subject to risks and uncertainties, and actual results may differ materially from those anticipated. The Company undertakes no obligation to update these statements, except as required by law.
