Adelaide, May 18, 2006 AEST (ABN Newswire) - Metallica Minerals Limited (ASX: MLM) has moved to add value to its coal assets with a third party investigation of the potential for underground coal gasification of its south-east Queensland coal projects.
Metallica today announced that Cougar Energy Pty Ltd, an unlisted Australian company with expertise in underground coal gasification, will study the feasibility of producing gas from Metallica's Kingaroy, Condamine, Miles-Chinchilla and Injune coal projects.
Underground coal gasification is a process for the in-situ conversion of coal into a gas which can be brought to the surface through drilled production wells, and used as a fuel for power generation or converted to petro-chemical products. It is more efficient in utilising the energy in the coal than coal methane gas extraction, and cheaper than using above ground gasification techniques.
"The investigation of the potential of underground coal gasification by Cougar Energy does not affect any future plans that Metallica might make to mine these deposits through conventional open cut techniques," Metallica Managing Director, Mr Andrew Gillies, said today.
"The coal that is subject to the agreement with Cougar Energy lies below 130 metres and is unlikely to be economic to extract through an open pit.
"The underground coal gasification project adds value to our coal development portfolio and is an adjunct to our mainstream nickel activities in North Queensland," he said.
Earlier this month, Metallica announced a A$2 million capital raising to further accelerate development of its NORNICO heap leach nickel laterite project in North Queensland through the placement of 8 million shares to the US-based Resource Capital Fund III LP.
The key points of the agreements with Cougar Energy are:
- Cougar Energy will, at its expense, investigate the feasibility of applying UCG to designated areas of the Kingaroy coal project (EPC 882), the Condamine coal project (EPC's 935, 936 and 963), the Miles/Chinchilla project (EPC 1041) and the Injune coal project (EPC's 1017 and 1018).
- These studies will only be carried out within Designated Areas so as not to interfere with Metallica's potential future open pit mining operations and only at depths exceeding 130 metres below ground level within these Designated Areas. Coal at these depths is unlikely to be economic for open pit extraction and therefore constitutes "stranded" coal deposits.
- An area of influence is provided for, as well as first rights of refusal for each party to participate in other Metallica coal or Cougar Energy UGC projects in Queensland, based on the same terms as the Condamine, Miles/Chinchilla and Injune Agreements.
- Cougar Energy may expend up to A$750,000 within 36 months of the Agreement to earn up to a 70% interest in the Kingaroy project, and up to A$550,000 within 36 months of the other Agreements to earn up to an 80% interest in the other projects.
- If Cougar Energy does not complete its progressive expenditure requirements, then the Agreements terminate unless otherwise agreed, and Cougar Energy will hold no interest.
- Once Cougar Energy has achieved a joint venture interest in any of the projects, Metallica has the right to contribute to expenditure, be diluted or retain a carried interest.
Metallica also has major interests in nickel (NORNICO nickel it's flagship project), bauxite, limestone and scandium and has now acquired joint venture partners to progress and supplement its expertise on its bauxite, coal, scandium, gold and uranium interests.
Source:
Peter Gill
Senior Consultant
FIELD PUBLIC RELATIONS
231 South Road
MILE END SA 5031
Tel: 08 8234 9555
Fax: 08 8234 9566
Mb: 0417 784 059
peter@fieldpr.com.au
Contact
Mr Andrew Gillies
Managing Director
Metallica Minerals Ltd
TEL: +61 7 3891 9611, Mob: 0416 137 556
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