The additional funds will be used to cover any extra costs that arise from the drilling of the well, as well as to fast track the appraisal and development of any discovery.
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Columbus will also use the cash to speed up technical and operational activities for its Weg Naar Zee licence in Suriname including the development of the field following well tests.
The funds will be available in three US$1.5mln tranches, the first of which will be drawn down immediately while Columbus said it had not yet decided whether it will use the remaining US$3mln.
Leo Koot, executive chairman of Columbus, said the funds will provide a “financial insurance policy” for the company going forward while also minimising equity dilution for shareholders.
He added that the funds will allow the group to progress “faster than might otherwise be the case”, although he stressed that the company will still aim to find “the lowest cost options for appraising and developing its assets”.
In a note, analysts at VSA Capital reiterated their ‘buy’ rating and 21.6p target price on Columbus, saying that the new funding agreement “puts the company in a strong position as the company begins to realise its transformational growth strategy”.
In early trading on Monday, Columbus shares were steady at 3.7p.