The company announced it had received firm commitments for a placement of 22.86 million ordinary shares at 35c each to raise $8 million, and plans to raise another $4 million through a share purchase plan.

The placement is being headed up by Austock Corporate Finance and co-managed by Cygnet Capital with Northern saying it attracted strong demand from existing and new investors from Australia and abroad.

While the placement is to be completed in two tranches, Northern said the second tranche of 16.3 million shares to raise $5.7 million is subject to shareholder approval.

Under the share purchase plan, eligible shareholders can purchase up to $10,000 of ordinary Northern shares at 35c each, a 22% discount to the five-day volume weighted average price.

Northern said documentation on the plan will be sent to shareholders shortly after the record date, proposed for June 18.

The company will use the proceeds of the capital raising to progress with exploration and feasibility work.

At the Maryborough coking coal project Northern plans to conduct infill drilling and core testing.

For its Elimatta thermal coal project in the Surat Basin, Northern seeks to complete the Environmental Impact Statement, mine optimisation studies and final feasibility studies for the proposed 5 million tonnes per annum open cut mine.

Funds will also be used for working capital and to support infrastructure development.

Northern said it needed to provide further cash backing for bank guarantees required to underwrite the feasibility, engineering and design studies for proposed port and rail expansions at Wiggins Island, Gladstone, and parts of Queensland Rail’s network.

Northern managing director Keith Barker said the company was in ongoing discussions with various parties for investment in its projects.

“These parties include end-users keen to secure long-term security of coal supply, trading and investment houses and mining companies looking to broaden their portfolio,” Barker said.

“We intend to continue evaluating strategic investment relationships with these parties while using the funds raised to further increase the value of our projects during the process.”

About two weeks ago Northern boosted Elimatta’s marketable reserves by 54% to 106Mt.

Shares in Northern are down 1 c to 45c in trading this morning.