Why Talon Energy kicked off a capital raising for $14m

ASX-listed and Perth-Mongolia-based smallcap Talon Energy (ASX:TPD) has received confirmation it will raise $14m ahead of its first gas production targeted for the first half of 2023.

The capital raising is made up of two parts: 

• A $12m share placement at 14.5 cents per share

• A Share Purchase Plan (SPP) of up to $2m

What is the money going towards? 

The funds raised are slated for three strategies, the company wrote on Friday.

• Capital for final costs needed to launch the Walyering Gas Project in the Perth Basin, WA 

• Exploration in the Perth Basin as part of Talon’s recently minted JV with Triangle Energy (ASX: TEG) and New Zealand Oil & Gas (ASX: NZO)

Talon is targeting first gas in 1HCY23 at the Walyering project, subject to regulatory approvals, APA gas pipeline connection times and smooth operations from partner Strike Energy (ASX: STX). 

The company also said there is potential for “further upside” in additional Walyering projects. Talon is also in the process of acquiring 100% interest in the Condor project, also onshore WA, targeting yet another section of the prolific Jurassic age Perth Basin.

Notably, Talon highlights today the company has kicked off a management-level review of its 33% stake in the Mongolian Gurvantes XXXV Project it develops alongside TMK Energy (ASX: TMK). 

Talon is currently considering a demerger from the project, suggesting the company may pivot towards becoming a pure play domestic gas producer. Sternship Advisers are in charge of the official review. 

 Placement details 

• The price reflects a 12.1% discount to the closing price of 16.5cps on 1 March 2023 (looking at the five day average, the price reflects a 14.9% discount) 

Talon's one year chart shows increasing liquidity

Disclaimer: Market Index helps small-cap ASX listed companies connect with Australian investors through clear and concise articles on key developments. Talon Energy was a client at the time of publishing. All coverage contains factual information only and should not be interpreted as an opinion or financial advice.