RANGE Resources is set to receive a
previously undisclosed sign-on bonus believed to be worth $US3 million
to $US7 million ($3.8 million-$8.9 million) as part of its joint venture
deal with a Canadian company to explore for oil and gas in Somalia's
Range director Peter Landau, who
visited Puntland last week, said it would share a portion of the funds
with the government of the semi-autonomous state.
He said Range should receive the
payment from Toronto Venture Exchange-listed exploration company Canmex
Minerals within a few weeks. Under the farm-in deal, Canmex has six
years to spend $US50 million on oil and gas exploration on Range's
tenements in Puntland, in return for an 80 per cent stake in the
Range is retaining the mineral rights
and offshore petroleum exploration rights as part of its 2005 deal,
giving it exclusive exploration rights over the entire Puntland state.
Mr Landau said the fact there was a
sign-on bonus in the joint venture deal was kept confidential because
the final amount had not been finalised.
Earlier in the week, Calgary-based
Canmex president Rick Schmitt told the Herald he "didn't want to
even go close to telling what the commercial arrangements were" although
he said the fee would be a material amount for Range and his company,
which has a $C60 million ($55 million) market value.
Canmex had $C3.5 million cash and $C3.3
million in term deposits on hand at the end of September. Mr Schmitt
said his company was confident it could raise the funds needed for the
$US50 million exploration program. He cited the backing of Canmex's 13.6
per cent shareholder, Abalone Capital, which is linked to Sweden's
Lundin Petroleum. Lundin, which has a market value of about $4.2 billon,
is listed on the Stockholm Stock Exchange
Mr Landau cited the importance of
Lundin's experience as a top explorer of "difficult countries" such as
Iran, Sudan, the Democratic Republic of Congo and apartheid-era South
Africa, as being key to the deal with Canmex.
But Range has not mentioned Canmex's
link with Lundin in any of its statements to the Australian Stock
Exchange. "We don't think it's relevant," Mr Landau said. "For us, the
importance is the relationship with Canmex."
He said some investors would have been
made aware of the Lundin-Canmex relationship through a story posted on
subscription website Africa Intelligence last year.
Range is planning a dual-listing on
London's Alternative Investment Market within the next two to three
months. The listing will include a $US20 million capital raising, which
Mr Landau said would be put towards buying out former partner Consort
Private and further mineral and offshore petroleum exploration in
The state has proven lead and zinc
provinces but Mr Landau said Range would also look for uranium, which
has so far only been found in the war-torn southern region of Somalia.
Despite the large joint venture deal,
Range shares fell 0.1c to 3.2c after the announcement on Tuesday and
closed at 3.4c on Thursday on volume of 26 million shares.