17/09/2009 - 00:00

Syngas draws Liberty, Wildhorse

17/09/2009 - 00:00


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THE growing emergence of underground coal gasification as a clean source of energy has been highlighted by recent deals in the sector, with directors positioned to reap the benefits.

Syngas draws Liberty, Wildhorse

THE growing emergence of underground coal gasification as a clean source of energy has been highlighted by recent deals in the sector, with directors positioned to reap the benefits.

It is an energy creation process, which in one form or another has been around for about 150 years, however the general public's understanding of it has created some barriers for the few Australian companies to have expanded into the sector.

The method, as the name suggests, involves converting or gasifying coal underground, which then creates deep chambers or caves that is suitable for storing carbon dioxide.

The end product, called syngas, is then drawn up to the surface and used to generate low-cost power and electricity with virtually no carbon dioxide emissions.

Liberty Resources, which was floated five years ago as a gold company, turned its focus to UCG about one year ago after it recognised an opportunity for potential substantial rewards.

However, it has not been without its challenges with the market view of UCG an "unholy blend of confusion and scepticism", according to Liberty managing director Andrew Haythorpe.

The company's share price was testament to that, hovering at around 10 cents before Liberty Resources entered into a joint venture in July with private company Clean Global Energy for the development of a UCG project in Queensland's Surat Basin.

The deal was quickly followed up by another joint venture with former Perth-based company Carbon Energy to develop multiple UCG projects in the Galilee Basin in Queensland.

Liberty managing director Andrew Haythorpe said the company had enough funds in place to take it through the next steps of setting up the partnerships and commercial arrangements.

"We've also been extremely encouraged by meetings that we've had so far, where we think we can manage our way through the funding gauntlet over the next five to 10 years," Mr Haythorpe told WA Business News.

Liberty this week received a $2.6 million cash injection from the exercise of just more than 99 per cent of its 34.7 million options.

Mr Haythorpe was one of the bigger beneficiaries of the option exercise after steadily increasing his options over the past few months.

Before the option exercise deadline of September 8, Mr Haythorpe converted 3.84 million options for a total $287,886. The options had a conversion price of 7.5 cents each, a substantial discount to Liberty's recent trading price of about 21 cents.

At the end of the conversion, Mr Haythorpe held about 9 per cent of the company's issued capital.

Chairman Alan Phillips converted 312,500 shares for a total of $23,437 while director James Becke converted 100,000 options for $7,500.

Wildhorse Energy is another Perth company expanding into the UCG sector. Earlier this month, the uranium company announced it would acquire unlisted Australian company Peak Coal through an all-scrip deal.

Peak holds rights to substantial coal assets in southern Hungary that have potential for UCG. The assets are near Wildhorse's flagship Pecs uranium project and it is expected the UCG projects will offer operational synergies.

Also located nearby is a 340-megawatt power station, which Wildhorse is eyeing as a potential offtake customer for the syngas produced at the UCG projects.

As part of the acquisition, Wildhorse also welcomed three new directors - Mark Hohnen, Ian Middlemas and Matt Swinney - who will receive a swag of options exercisable at between 50 cents and 70 cents pending shareholder approval.






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