West Perth-based Metex Resources Ltd will move to full ownership of Carbon Energy Pty Ltd and its underground coal gasification technology after agreeing to buy out the CSIRO for around $41 million in cash and scrip.
West Perth-based Metex Resources Ltd will move to full ownership of Carbon Energy Pty Ltd and its underground coal gasification technology after agreeing to buy out the CSIRO for around $41 million in cash and scrip.
It will pay $2.5 milllion in cash and issue 100 million shares to CSIRO, giving the later organisation a 27 per cent stake in Metex.
The full text of a company announcement is pasted below
Metex Resources Limited (ASX: MEE) is set to reposition itself as a leading Australian-listed clean coal company after reaching agreement to buy out its 50% partner in its Joint Venture Company Carbon Energy Pty Ltd (CEPL), Australia's CSIRO. The acquisition will give Metex 100% ownership of a unique Underground Coal Gasification ("UCG") technology which is set to be commercially tested early next year.
Perth-based Metex said today (Wednesday) that it had reached agreement to acquire the CSIRO's combined 50% shareholding for a consideration of A$2.5 million in cash and 100 million Metex shares, subject to shareholder approval. The landmark transaction will result in the CSIRO becoming Metex's largest shareholder with a 27% fully diluted stake.
Metex's Managing Director, Mr Ian Walker, said the transaction was one of the most significant in the Company's 14-year history, signalling its decision to focus on the exciting UCG venture - which will initially be trialled in Queensland - and reposition the Company as a clean coal energy company.
"Following completion of the transaction we will hold 100% of CEPL, enabling us to fast-track the development of our planned UCG demonstration plant in the Surat Basin, where construction is scheduled to begin in January 2008, subject to receiving all approvals," Mr Walker said.
CEPL has completed the engineering design and costings for the construction of the demonstration plant, which will be located at Bloodwood Creek, 300km west of Brisbane, where Metex recently announced an upgraded Inferred Resource of 100 million tonnes of high-quality coal. This resource is estimated to contain approximately 2,000 petajoules of energy, with approximately 1,000 petajoules being potentially recoverable using CEPL's UCG extraction technology.
The technology involves drilling boreholes from surface to the underground coal seam, and gasifying the coal in-situ to produce a syngas suitable for conversion into feedstock for power generation, or for conversion into ultra-clean liquid fuels and chemicals. UCG promises to significantly reduce the cost of introducing new clean coal technologies, by cutting costs of the coal gasification phase. UCG replaces the coal mine and surface coal gasifier stages, which are both large capital items, thus reducing both costs and environmental impact.
The Bloodwood Creek trial will be Australia's largest UCG gas production demonstration, and will use CEPL's proprietary UCG technology. This standard Carbon Energy UCG module will produce syngas at the rate of 1PJ (petajoule) per year, sufficient to provide up to 10MW of power per module.
"We are very pleased to welcome the CSIRO as a major shareholder in Metex as a result of this transaction, which will substantially reposition the Company at the forefront of one of the most dynamic growth areas in the Australian market - the clean energy sector," Mr Walker said. "We now have an exciting opportunity to grow Metex as a significant energy company specialising in the development of UCG as a source of economic quantities of synthetic gas or syngas suitable for power generation and coal to liquids opportunities."
The Company intends to recruit a Chief Operating Officer and Director with the skills necessary to drive the development of its energy assets. Dr Cliff Mallett (current Executive General Manager of CEPL) will also be invited to join the Metex Board as Technical Director - UCG.
CEPL has defined at least three commercial-scale development options for the project to be considered as part of the planned $20 million demonstration trial with different levels of capital expenditure, all offering the potential to generate substantial annual cash flows and returns.
