This morning shares of Liquefied Natural Gas Ltd (ASX: LNG) entered a trading halt, pending "a material announcement regarding a placement of ordinary shares" its ASX announcement read.
The company says it'll release an announcement to the ASX with full details of the placement in the near future but shares are expected to remain in a trading halt until Wednesday 20 May 2015.
The placement, expected to be offered to sophisticated and professional investors, comes a year after the company's shares started on a blistering run which has resulted in total share price gains of 1,476% since January 2014.
Whilst not yet profitable, LNG Ltd has plans to construct two liquefied natural gas tolling facilities in North America, named Magnolia and Bear Head.
Magnolia is the company's flagship prospect, with management previously targeting financial close by mid-2015.
Phase one of Magnolia was expected to cost at least $2.3 billion and would include the necessary infrastructure for a four million tonnes per annum (4mtpa) tolling facility. Stage two would add a further 4mtpa at a much cheaper cost.
Phase one was expected to be funded by a combination of debt (from banks or other lenders) and an equity investment from joint venture partner Stonepeak.
Bear Head LNG, LNG Ltd's other project in Canada, is aiming for a total production capability of 12mtpa.
Whilst the company did not specifically detail the amount of money to be raised nor its intended use, Dow Jones Newswires reported this morning that 40 million new shares would be issued at $4.35 each.
The money raised would be used by the company to "start an early works program at its proposed Magnolia liquefied natural gas project…advance gas supply and infrastructure access for the proposed 8-million-ton-a-year Bear Head LNG project in Canada's Nova Scotia province, and secure a third LNG project in North America."
Should you buy LNG Ltd shares?
Since I originally recommended readers buy LNG Ltd shares back in March 2014, shares have flown over 1,000% higher. Whilst the risk-reward trade off isn't nearly as good as it was back then, if LNG Ltd gets both it projects running its shares will be worth significantly more than they are today.
However, if things don't go as smoothly as planned, investors can expect significant selling pressure because it remains a speculative punt – despite having a $2.3 billion market capitalisation!
