Key Points:
- Exclusive agreement signed with highly regarded commercialisation partner
- DragonCoal to evaluate coal mining opportunities on Liberty's Surat tenements and source project finance at no cost to Liberty.
- LibertyResources to focus on development of QLD-based UCG to urea projects
Fertiliser and clean fuels company, Liberty Resources Limited (ASX:LBY) is pleased to announce that it has entered into mandate with DragonCoal Pty Ltd ("DragonCoal") to oversee the optimised development plan for Liberty's Surat Basin coal assets. Liberty has a portfolio of 18 tenements covering approximately 8,000 sq/km in the Surat Basin located in Southern Queensland, Australia.
DragonCoal's Executive Chairman, David Murray was excited by opportunity this Agreement. "This watershed agreement with Liberty is a major value-add for both companies" Mr Murray said. "We are very heartened by the prospect of working with the professionalism of the Liberty Board and management in achieving a mutually beneficial outcome" he said.
The development plan will include:
- Analysis of individual tenements across geological, mining engineering, landowner, financial (capital and operating) and logistical factors, and;
- Accelerated Exploration programs including early start of baseline environmental work, and;
- Initial design of likely development options should economic coal be delineated.
This scope of work allows DragonCoal to best match Liberty's portfolio potential with an optimised Coal Partner. Coal Partners are entities known to DragonCoal that are seeking security of supply of coal. The profile of a Coal Partner is typically a coal-fired power utility operator, steel manufacturer, cement manufacturer or large scale coal trader.
Whilst the final form of the future farm into Liberty's Surat Basin assets is not known at this stage, it will likely have the following features:
- Modest cash at signing;
- Agreement for accelerated spend on tenements (provided results warrant ongoing expenditure);
- Predetermined fixed price for JORC coal resources.
Liberty Resources' Managing Director, Andrew Haythorpe said under the agreement with DragonCoal, no commercialisation costs will be incurred by Liberty.
DragonCoal will undertake all efforts on Liberty's behalf at its risk, and only when outcomes are certain will DragonCoal receive remuneration as follows:
- Modest percentage of any cash payment up front;
- A modest percentage of future payments for coal (in cash or coal).
"The DragonCoal mandate will allow Liberty to focus on its central Queensland based Denison and Galilee projects where it is working to develop an integrated UCG (Underground Coal Gasification) to urea fertiliser project" Mr Haythorpe added.
Libertyhas granted DragonCoal an exclusive mandate period expiring 30th June 2011 in return for its efforts, with milestones established providing for early termination if progress does not occur.
DragonCoal has already initiated evaluation of LBY's Surat Basin coal assets.
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