05/05/2008 - 10:11

Incitec aquires 10.5% stake in Metex for $11m

05/05/2008 - 10:11

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West Perth based mineral exploration company Metex Resources Ltd, has secured $11 million through share placement with chemical and fertilizer group Incitec Pivot Ltd.

Incitec aquires 10.5% stake in Metex for $11m

West Perth based mineral exploration company Metex Resources Ltd, has secured $11 million through share placement with chemical and fertilizer group Incitec Pivot Ltd.

IPV agreed to subscribe for 55 million shares in Metex at 20 cents per share, allowing Metex, soon to be renamed Carbon Energy Group, to move forward on its Underground Coal Gasification venture in Queensland.

IPV now holds a 10.5 per cent stake in Metex, joining the CSIRO as a major shareholder.

Full announcement below:

Metex Resources Limited - soon to be renamed Carbon Energy Limited - has taken a major step forward in the commercialisation of its Underground Coal Gasification (UCG) venture in Queensland after securing the leading chemical & fertilizer group Incitec Pivot as a cornerstone investor and strategic partner through an A$11 million share placement and proposed strategic Joint Venture.

The Perth-based Company said today that it had executed a Memorandum of Understanding (MOU) with Incitec Pivot which is a top-50 ASX Company with a market capitalisation of over A$8 billion under which IPL agrees to subscribe for 55 million shares in Metex at 20 cents per share for a payment of A$11 million.

In addition, the MOU provides for a Joint Venture Company to be established upon the successful conclusion of a planned UCG trial for the demonstration of commercial scale syngas. The A$20 million trial will be undertaken at Bloodwood Creek, which is located in the Surat Basin, some 55km west of Dalby in southeast Queensland.

IPL will hold a minimum 10.5% stake in Metex, joining the CSIRO as a major shareholder in Metex. Last year, Metex reached agreement to take full ownership from CSIRO of their 50/50 Joint Venture company, Carbon Energy Pty Ltd (CEPL) for a combination of cash and shares.

"This is a major development for the Company and we are pleased to have the strategic backing of such a large and well-respected company as Incitec Pivot as we commence this landmark trial", said Metex's Managing Director, Mr Ian Walker.

"Metex has positioned itself as a trailblazer in the development of UCG projects on a commercially viable level, with the UCG technology offering the potential to significantly reduce the cost of introducing new clean coal technologies, by cutting costs of the coal gasification phase," he added.

Metex recently announced that all approvals had been granted to proceed with a commercial scale oxygen-injected UCG trial. The Company has defined a 100 million tonne JORC compliant Inferred coal Resource at Bloodwood Creek, and within this resource sufficient coal will be quarantined for a minimum 30 year life for any ammonia plant and related facilities which are constructed. It is expected that this coal resource will be increased with further drilling.

Under the terms of the MOU, IPL will be granted exclusive global rights to the use of CEPL's UCG technology to produce Syngas for ammonia and ammonia derived product manufacture, either within or outside of a joint venture with CEPL, by way of Technology Licence Agreements.

IPL and CEPL intend to jointly pursue opportunities to exploit UCG technology via new manufacturing facilities for ammonia and provision of UCG syngas to existing ammonia and ammonia derived product manufacturing facilities, with Metex retaining the right to use Syngas from UCG for all other products such as Coal to Liquids, power generation and other high-value petrochemicals.

It is anticipated that the parties will cooperate to investigate the viability of a 1,000 tonne per day ammonia plant, in respect of which IPL will have off-take rights, based on syngas production from the Bloodwood Creek Coal deposit.

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