Tomorrow morning Chariot Limited (LON:CHAR) shareholders will be expected to vote through approval for the group’s recent fundraising.
It should be voted through with little objection, which will then see the group’s new shares being dealt in the market on Wednesday morning.
The July announced capital funding sought to raise a net $6.4m by way of a Placing of 83.35m new shares at 6.5p each, together with another $2m by way of an Open Offer to shareholders, for another 23.35m new shares.
Both issues were at a small discount to the price at the announcement, which was already a positive signal of support, with the funding being oversubscribed.
CFO Julian Maurice-Williams stated that:
“We are grateful to our shareholders for their considerable support, which has enabled Chariot to deliver a further $2 million via this significantly oversubscribed Open Offer, bringing the total fundraise to $9 million gross.
This is an exciting period for the Company, and we look forward to updating all our stakeholders on the imminent drilling campaign at Anchois, alongside progress across the wider Group, over the coming months.”
The Business
Chariot is an Africa-focused transitional energy group that is developing scalable energy projects across its three business pillars: Transitional Gas, Transitional Power and Green Hydrogen.
Transitional Gas is focused on high value, low risk gas development projects in Morocco, which is a fast-growing emerging economy, with a clear route to early monetisation, delivery of free cash flow and material exploration upside.
Transitional Power is focused on providing competitive, sustainable and reliable energy and water solutions across the continent through building, generating and trading renewable power.
Green Hydrogen is partnering with TEH2 (80% owned by TotalEnergies, 20% by the EREN Group) and the Government of Mauritania on the potential development of a 10GW green hydrogen project, Project Nour in Mauritania, and is progressing pilot projects in Morocco.
The group declares that its core focus is to generate near-term cash flows from its gas assets to return capital to shareholders while continuing to build and develop its longer-term project pipeline.
The net proceeds of the Fundraise will be used to strengthen the balance sheet to continue to progress and deliver value from Chariot’s portfolio of projects, while also helping to secure a material new venture opportunity with multi-billion barrel potential, and additionally to progress onshore gas commercialisation plans in Morocco to build a gas to industry supply.
It is now known that the company will try to secure a new multi-billion-barrel opportunity in licences adjacent to recent giant discoveries in Africa, located in a basin where Chariot has extensive operational and technical expertise with a deep understanding of the exploration potential in Namibia.
The company has clearly stated that with the net proceeds of the Placing and the Subscription, the working capital available to the group will be sufficient for the group’s requirements for at least the next 12 months.
Management Comment
CEO Adonis Pouroulis stated that:
“We are very pleased to report the successful completion of our significantly oversubscribed Placing and Subscription, subject to shareholder approval at the General Meeting.
The funds raised will enable us to progress with key workstreams and a priority new venture as we concurrently move towards the drilling of the Anchois-East well in mid-August with partners Energean and ONHYM.
We have material catalysts ahead for our business as we look to unlock the value of our existing assets whilst building out our longer-term portfolio.
We look forward to providing further updates across all our activities throughout the coming months.”
Analyst’s Views
Analyst James McCormack at Cavendish Capital Markets has a 51.2p valuation on the group’s shares.
While Stephane Foucaud at Auctus Advisors has a 45p Price Objective, after allowing for the dilution of the new shares being issued, while also considering that the current share price is an opportunity given the materiality of the near-term newsflow.
In My View
The shares, which a year ago were trading at 17p each, are currently only 6.90p and looking capable of running back above the 10p level last seen at the end of May this year.