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- Leigh Creek Energy (LCK) has signed a term sheet with China New Energy for their proposed Joint Venture for In-Situ Gasification operations in China
- Under the terms of the agreement, Leigh Creek will hold a 35 per cent interest in the Joint Venture which will develop coal interests in China
- According to Managing Director Phil Staverley, some project valuations have already been completed but due to COVID-19 the timing of substantial work is not yet clear
- Leigh Creek gained 32.65 per cent today with shares closing at 13 cents each
Leigh Creek Energy (LCK) has signed a binding term sheet with China New Energy (CNE) for their proposed Joint Venture (JV).
The JV will undertake In-Situ Gasification (ISG) operations in China, starting with commercial interests of CNE in Shanxi Province in the north of the country, as well as third party interests.
Under the terms of the agreement, Leigh Creek will hold an initial 35 per cent interest in the JV, while CNE which is part of the Shanxi Meijin Energy Group, will hold a 65 per cent interest.
Leigh Creek’s responsibilities and revenue from the JV will fall under three main phases that are designed to be replicable across projects owned by CNE or third parties.
The first stage is the evaluation of a site for its ISG potential and would be remunerated in consulting fees. The second phase will entail conducting a pre-commercial demonstration and will incur a mix of capital returns and fees.
The final stage is the delivery of a 2P reserve for the targeted resource and will bring in capital returns and royalties.
Managing Director Phil Staverley described the JV as an exciting development for the company and noted some project valuations have already been completed.
“It provides LCK with access to the Chinese market, with a trusted partner and access to significant revenue stream. It is expected that substantive work on ISG will start in 2020 as some project evaluation has already taken place in locations in China,” he said.
“However, given the COVID-19 situation it is very difficult for LCK to be able to predict when LCK staff will be allowed to travel and return to Australia from China and as such timing remains fluid.”
Leigh Creek gained 32.65 per cent today with shares closing at 13 cents each.
