27/07/2009 - 14:09

Liberty jumps on Queensland syngas deal

27/07/2009 - 14:09

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Shares in Liberty Resources have soared as much as 56 per cent following a deal with Carbon Energy for the joint development of an underground coal gasification project in Queensland.

Liberty jumps on Queensland syngas deal

Shares in Liberty Resources have soared as much as 56 per cent following a deal with Carbon Energy for the joint development of an underground coal gasification project in Queensland.

Both companies have signed a heads of agreement over a 338 million tonne thermal coal resource in the Galilee Basin.

Under the deal, Carbon will apply for a mineral development licence to undertake a trial project, conduct feasibility studies into the commercial opportunities and design and construct a commercial scale UCG facility.

Liberty will be free carried through to the initial assessment and trial phase, which could involve some exploration drilling and the establishment of trial plant capable of initially producing 1 and then 40PJ each year of syngas.

Carbon Energy will hold 80 per cent of the JV and will be the operator.

Liberty's latest agreement follows last week's deal with private company Clean Global Energy for development of a UCG project in the Surat Basin in Queensland.

Shares in Liberty jumped 4.7 cents, or 56 per cent, to a high of 13c before closing at 12.5c today.

 

 

The announcement is below:

 

 

Carbon Energy has signed a Heads of Agreement (HoA) with Liberty Resources Limited ASX: LBY ("Liberty") to establish a joint venture to develop Liberty's 338 million tonne thermal coal inferred resource in the Galilee Basin.

Carbon Energy will hold 80% of the Joint Venture and will be the operator.

Carbon Energy will contribute its expertise in Underground Coal Gasification to assess the optimal development of the resource and to execute the following development plan:

- Application 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 (see attached map) and has assessed these EPCs' to contain a JORC compliant estimate of 338 million tonnes of inferred coal resource. The coal resource is interpreted to remain 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. Furthermore, 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.

The development of the Joint Venture project will be subject to additional technical and market feasibility studies together with the appropriate Government approvals, having regard for the Queensland Government's UCG Policy and the interests of overlapping coal seam gas tenement holders. Currently the 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.

Following approvals and a successful trial it is intended to expand the project to an initial capacity of 40PJ per annum, generating electricity and other products from syngas.

Under the HoA, the JV structure can also be applied to other areas in the Galilee where Liberty currently has five EPC applications pending.

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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