Carbon Energy (CNX) has executed a deal to joint venture a 338 million tonne inferred thermal Coal Resource in Queensland’s Galilee Basin.
It will hold 80% of the Joint Venture and will be the operator, Libery Resources (ASX: LBY) will contribute the tenements holding the coal resource into the JV.
Using Underground Coal Gasification (UCG), a number of coal resources in the Galilee Basin have potential to be monetised. Already, Carbon Energy has Queensland Government policy approval for a UCG plant at one of its tenements in the Surat Basin.
Carbon Energy has signed a Heads of Agreement (HoA) with Liberty Resources (ASX: LBY) to establish a joint venture to develop Liberty’s 338 million tonne thermal coal inferred resource in the Galilee Basin.
The optimal development of the resource will be evaluated by Carbon, using its expertise in Underground Coal Gasification.
In addition, Carbon will:
- Apply for a Mineral Development Licence to undertake a trial
- Design and construct a trial project
- Conduct feasibility studies into the following commercial opportunities: power generation, synthetic natural gas production, chemical production, liquid fuel production; and
- Design and construction of commercial scale underground coal gasification facility
Liberty holds two granted Exploration Permits for Coal (“EPC”) and an overlying Mining Development License Application (“MDLA”) in the Galilee basin and has assessed these EPCs’ to contain a JORC compliant estimate of 338 million tonnes of inferred coal resource.
The coal resource is open in all directions and is expected to increase significantly with exploration drilling. Liberty will contribute 100% of the EPC’s into the joint venture.
Liberty will be free carried through the initial assessment and trial phase which will involve some exploration drilling and the establishment of a trial plant capable of producing initially 1 and then 40 PJ per annum of syngas. The two parties will thereafter contribute to the joint venture in proportion to their pro-rata interest.
Carbon Energy can elect to establish additional 40 PJ per annum Pilots under the Agreement with Liberty. At this stage 4 other Areas of interest have been identified by Liberty.
Currently, the Queensland government policy provides for three UCG operations in Queensland, including Carbon Energy’s existing MDL 374 at Bloodwood Creek in the Surat Basin. The Joint Venture will seek to obtain Government approval and negotiate terms with the overlapping tenement holders in order to progress this development. These discussions are anticipated to take approximately 12 months to conclude.
Carbon Energy`s Managing Director Mr Andrew Dash said ”While this development is at an early stage we view the Galilee Basin area is an attractive growth target for the company principally due to the availability of huge deep coal resources, which are not able to be commercially mined by applying traditional mining techniques”.
“More significantly the Galilee Basin has been identified by many companies as the next major energy province in Queensland. The Liberty held tenements are in close proximity to recently announced resource projects. Such projects will create the need for additional infrastructure such as road, rail and port facilities which, once in place, will open up domestic market opportunities for electricity, synthetic natural gas and chemical feedstock.”
“This agreement is consistent with Carbon Energy’s strategy to obtain equity interests in additional coal deposits by leveraging off our leadership position in Underground Coal Gasification technology.”
Application of Carbon Energy’s leading underground coal gasification technology has the potential to monetise these large, otherwise stranded coal resources in the Galilee Basin and provide the basis for the development of a world scale energy province in central Queensland.
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