Northern Energy placed 4.8 million ordinary shares at $A1.25 each – an 8% discount to the August 2008 volume-weighted average price.

Northern Energy managing director Keith Barker said the raising received strong demand with a significant oversubscription and large scale backs, a result he was pleased with given the challenging market environment.

Northern Energy will use the funds for ongoing exploration and preparation of an environmental management plan for the initial mining lease application for the Maryborough project.

At the Elimatta project, funds will go towards mining and engineering studies and further exploration in the vicinity of the project.

Exploration will also be conducted in northern New South Wales continuing the Ashford Regional Coking Coal Project and in southern Queensland for thermal coal.

Funds will also be used towards the company’s commitment to Wiggins Island where it plans to export coal from the Elimatta and Yamala projects.

As part of the Wiggins Island Coal Terminal final feasibility funding agreement, Northern Energy must underwrite its share of the feasibility and final engineering design costs.

Northern Energy plans to raise a further $2 million through a share purchase plan for existing shareholders.

Under the plan each shareholder can apply for up to $5000 worth of ordinary shares at $1.25 each.

Northern Energy was trading mid-morning today down 2.23% at $1.46.