Leigh Creek Energy set to lease its syngas pilot plant to South African firm

Leigh Creek Energy ASX LCK lease syngas pilot plant South African firm Carbon
African Carbon Energy will utilise Leigh Creek Energy's syngas pilot plant to help it assess the feasibility of its own underground coal gasification project in South Africa.

Leigh Creek Energy’s (ASX: LCK) pre-commercial demonstration (PCD) syngas plant in South Australia has attracted international interest, with a South African-focused syngas company set to lease out the equipment.

Under a Heads of Agreement (HoA) agreement, African Carbon Energy will use the pilot plant for its own Theunissen in-situ gasification (ISG) project in South Africa, while Leigh Creek Energy will also provide advisory services to the mining and metals company.

The agreement comes after China Communications Construction Company (CCCC) committed to providing Leigh Creek Energy with a draft HoA to provide opportunities for investing and developing projects beyond ISG.

Leigh Creek Energy managing director Phil Staveley said the soft agreement demonstrated the international appeal of its namesake energy project.

“To announce another HoA so quickly after the HoA with China Communications Construction Company indicates the level of international interest in the Leigh Creek Energy Project,” he said.

“Furthermore, the level of due diligence undertaken by these two corporations indicates their level of confidence in the company demonstrating successful syngas flow in the near future.”

Importantly, once the final lease and services agreements are executed, it will provide Leigh Creek Energy with an early revenue stream while also enabling the company to recover most of the costs associated with the PCD plant.

In addition, the agreement will provide the company with a “first mover advantage” on any overseas projects or joint ventures, with Leigh Creek acknowledging it was also being approached by other firms to provide similar services.

Leigh Creek sets ISG benchmark

African Carbon Energy has turned to Leigh Creek Energy for technical advice as it moves to develop its own Underground Coal Gasification (known as ISG in South Australia) projects.

The company purchased massive coal tenements from BHP Billion in 2012 which are ideally suited for UCG.

African Carbon Energy will use Leigh Creek Energy’s equipment and expertise to save it time and money when demonstrating Theunissen’s potential for power generation.

The international interest in the Adelaide-based company’s ISG project and associated equipment comes as it advances its own work on achieving commercial rates of gas flow at its namesake project.

Earlier this month, Leigh Creek Energy successfully achieved 13 days of continuous production of commercial quality syngas, and 89 days of continuous operation of its PCD.

The project sits within the Leigh Creek coalfields in northern SA, which the state government’s pre-trial Independent Assessment Report identified to be “ideally suited” for the ISG process.

Investors welcomed today’s news, pushing the company’s shares up 4.7% to $0.110.

Lauren has more than seven years’ experience as a business journalist and editor in Australia and Southeast Asia. With specialist knowledge of the resources sector, including oil and gas, she has covered publicly listed companies of all sizes. Lauren has reported across a range of industries including mining and property.