Reconnaissance Africa has earmarked US$2.8 million (N$47.6 million), which could rise to US$4.1 million (N$69.7 million, for its operations in Namibia’s Kavango Basin.
The Canadian junior oil and gas company, which controls petroleum licences covering approximately eight million acres in the northeast of the country, is drilling the Kavango West 1X exploration well and has ring-fenced these funds for road construction, site preparation, rig maintenance, and environmental, social, and governance (ESG) programmes.
An additional US$500,000 (N$8.5 million) has been allocated for local corporate and administrative expenses.
Spending will be guided by results from Kavango West 1X, which has already reached a depth of 2,300 metres and is targeting a total of 3,800 metres through the Otavi carbonate reservoir.
To secure this funding, the company aims to raise C$18 million (approximately N$234 million) from selling 30,000,000 units at C$0.60 per unit through a syndicate of underwriters led by Research Capital Corporation, with Canaccord Genuity Corp. and Haywood Securities Inc. also participating.
Each unit consists of one common share and one warrant, giving the investor the right to buy an additional share at a fixed price in the future.
This structure provides ReconAfrica with immediate cash from the sale of shares, while the attached warrants could provide additional funding if exercised in the future.
From this offering, ReconAfrica expects to receive net proceeds of about US$16.5 million (N$280.5 million), potentially rising to US$19 million (N$323 million) if the overallotment option is exercised.
Despite this injection, the company acknowledges that further financing will be needed to fund follow-up appraisal work in Namibia, with options under review including joint-venture partnerships, additional equity, or debt financing.
In the previous filing, Reconnaissance Africa indicated that the total drilling expenditures reached C$18.3 million (N$247.5 million), driven primarily by the Naingopo campaign.
In addition, ReconAfrica spent approximately C$3.5 million (N$47.2 million) on road and site preparation for Kambundu (now Kavango West) before ultimately changing its drilling locations.
Additional mobilisation and demobilisation costs included the removal of rigs from Naingopo, as well as maintenance and preparations for the new Kavango West 1X site.
Geology and geophysics work, along with seismic planning, accounted for a further C$248,000 (N$3.35 million) during the quarter, while C$3.2 million (N$43.5 million) was directed to working capital.
The company acknowledged that delays in the Naingopo drilling programme pushed costs beyond budget.
