(Sharecast News) - Resources company Altona Energy has entered into early stage negotiations with a third party to acquire a petroleum exploration licence application on a large tenement within a well-known coal-bearing basin - the Arckaringa Basin in South Australia, it announced on Thursday
The AIM-traded firm said the tenement was in close proximity to the major national road and rail transport corridor, and also close to its historic minerals exploration licences within the Arckaringa Basin.
It said it commissioned a preliminary report from mining consultant WSP Australia, which stated the tenement was "sufficiently prospective" to warrant further investigations in respect to developing a commercially-viable in-situ gasification project.
WSP also indicated that such a project could form part of a commercially-viable and much broader development by the company, in the form of an 'energy precinct'.
In addition to the chemical and other by-products possible from the in-situ gasification process, the energy precinct would be designed to produce energy from a variety of sources, including syngas from in-situ gasification, as well as a co-located wind or a solar energy field.
South Australia has an energy deficit, and Altona said there were a number of remote mining operations that would "very likely welcome" locally-produced power at a competitive rate.
The company said it would update shareholders on the outcome of the negotiations in due course, together with an initial cost plan and timeline to establish the presence of coal in at least two areas of the tenement at depths suitable for in-situ gasification.
Altona also noted its announcement on 6 June, that it had entered into a memorandum of understanding with a Chinese vanadium company which it was investigating ahead of a potential investment.
It confirmed on Thursday that it had decided against making an investment into the company at the present time, due to a number of key market and economic factors.
Additionally, in respect of its existing Australian activities, the board said it had agreed to withdraw its applications for the renewal of the three exploration licences - 5676, 5677 and 5678 - in the Arckaringa Basin.
It noted that it does not own the petroleum exploration licence agreement which lay over those tenements, adding that it believed it would not have the opportunity to acquire it in the foreseeable future.
And, as it remained focused on in-situ gasification for the extraction of coal, rather than more traditional coal mining methods, the cost of carrying those tenements would be both administratively and economically redundant to the current strategy of Altona.
Finally, at a board meeting held on 19 November, Ma Chi - the representative of Altona's joint venture partner Sino-Aus Energy Group and a non-executive director of the company, announced that Sino-Aus was no longer interested in an investment in in-situ gasification.
As a result, the company dissolved its joint venture agreement of 5 November 2015 with Sino-Aus, and Ma resigned from the board with immediate effect.
"Over the past 10 months, we have been working diligently to find an alternative source of revenue for the company and this exciting opportunity to acquire a PELA could represent a major step for the future of Altona," said non-executive director Philip Sutherland.
"The frustration for shareholders since 2015, has been the knowledge that Altona has had the financial backing from its joint venture partners and also vast amounts of mining data collected over many years of exploration on our tenements, but we did not own the correct licence to allow us to prosecute an in-situ gasification project.
"Early indications are that this new and very exciting opportunity could allow us to achieve what we set out to do five years ago."
31 Mar 2015 10:48