Linc Energy has announced that it has signed formal agreements with Exxaro Resources which will result in the development of the company’s first commercial Underground Coal Gasification project in Sub Saharan Africa.
UCG allows access to coal resources that are not economically recoverable by other technologies. By some estimates, UCG will increase economically recoverable reserves by 600 billion t globally.
The agreements signed by Linc and Exxaro allow for the joint pursuit of UCG to develop energy solutions in the region including utilizing synthesis gas for power generation and gas to liquids.
Linc Energy will receive an upfront licence fee of AUD 20 million; ongoing royalties for the synthesis gas produced and sold; a further AUD 7 million on the initial UCG project passing agreed performance tests, currently scheduled for 2017 and engineering fees for services to the partnership.
Linc Energy has also agreed to take a minimum of 15% equity in the initial UCG project, plus an option for up to 49% equity participation in all UCG project developed by Exxaro.
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