ReconAfrica has filed a short-form shelf prospectus covering 25 months to raise N$1.7 billion (C$120 million) to fund the exploration and evaluation activities of the company in the Kavango Basin.
In its Quarterly Financial Reports filed on Friday, ReconAfrica said its working capital was C$8.9 million as of December 31, 2023, including US$5.2 million in cash.
The Canadian company says it completed the sale of Renaissance Oil Corp., holder of the Mexican assets, for deemed gross proceeds of approximately C$10.3 million (US$7.5 million), resulting in a gain on sale of C$85.3 million and a reduction in net liabilities of C$85.6 million.
In addition, ReconAfrica states that it reduced the general and administrative expenses in the fourth quarter by 27% compared to the third quarter in 2023 and by 32% compared to the fourth quarter of 2022 after streamlining the organization.
On February 28, 2023, ReconAfrica said it had entered into a global settlement agreement to resolve all previously announced U.S. and Canadian class action lawsuits.
“The settlement is subject to coverage by the company’s insurers and, if approved, will not have any direct financial impact on the company,” ReconAfrica said.
On a positive note, the mines ministry granted ReconAfrica and its joint venture partner, Namcor, approval for the Second Renewal Exploration, which covers the period from January 30, 2024, to January 29, 2026.
As part of the approval for the Second Renewal Exploration Period, the Company requested and has been granted a relinquishment exemption and has retained 100% of the original acreage.
The parties also received key land access approvals. They completed the surveying, demining and debushing for Damara Fold Belt – Prospect L, which will be the first well to be drilled in the upcoming multi-well drilling program expected to commence in June 2024.
Additional civil works are being undertaken, including the construction of well site access roads and the drilling pad and the tendering of key long-lead oil services and equipment.
ReconAfrica CEO Brian Reinsborough said the ReconAfrica team had a productive quarter as we significantly advanced our understanding of the prospectivity of the Damara Fold Belt play, while at the same time advancing our joint venture process and preparing for drilling operations.
“Our technical team has increased our understanding of the oil potential of the Fold Belt play by integrating all available geochemical data and conducting additional basin modeling studies,” Reinsborough said.
He added that the NSAI was evaluating the work, whose report for the revised resource is expected in early March 2024.
According to Reinsboroughm, the revised report will also provide interested third-party joint venture partners with an independent evaluation of the oil and natural gas potential in the Damara Fold Belt. “We expect to wrap up our joint venture process in April. I recently visited Namibia, where we met with multiple government agencies and ministers who expressed their appreciation and continued commitment to our project and the energy industry,” he said.
