The funds will be raised via a private placement of 26,450,000 fully paid ordinary shares at $0.12 each to raise $3,174,000; 12,500,000 converting notes at $0.12 to raise $1,500,000; and a Share Purchase Plan for the issue of a maximum of 25,000,000 fully paid ordinary shares at $0.12 each to raise up to $3,000,000.

The funds are to be applied principally to the CBM appraisal drilling and test production program in PEL 238, NSW, as required under the farmin terms to increase the company’s CBM interest up to 25%, and then to 32.5%. The CBM program complements the active exploration being conducted for conventionally reservoired gas (ESG 100%) in PEL 238.

A five well drilling program to prove up gas reserves (1P and 2P) in the Gunnedah Coal Seam Gas project is planned along with a four well program to seek additional gas reserves in conventional reservoirs in PEL 238 areas surrounding the proven 12 petajoule Coonarah Gas Field.

Eastern Star gas is also set for its first commercial gas delivery from the Coonarah Gas Field to the Narrabri Power Project, which is to be commissioned for its first electricity sales to Country Energy later this month.

Any new reserves from the drilling program would provide additional feed for the Narrabri Power Project, which has been designed for easy scaling up.