Environmental Clean Technologies Limited (ECT or Company and ASX code: ESI) is pleased to advise it has entered into an agreement to secure an interest in a coal Exploration Licence in Victoria.
- ECT to acquire an interest in a coal Exploration Licence in Victoria
- Exploration work to run over next 2 to 3 years
The agreement is with Podium International Pty Ltd (Podium) to acquire the right to take over Podium’s rights and obligations under an arrangement with Mecrus Resources Pty Ltd (Mecrus) in relation to a Victorian exploration licence application known as EL5119.
Mecrus has applied for Exploration Licence EL5119, which once granted will give Mecrus the rights to explore for coal and apply for coal production tenements located northeast of Mirboo North and covering 33 sq kms.
The effect of these arrangements is that ECT will be able to acquire from Mecrus the contractual right to explore for coal and acquire the benefit of Mecrus’s priority position to apply for coal production tenements over this area.
The Company, in consideration of assuming Podium’s rights and obligations in relation to EL5119, will issued to Podium 2.0 million ordinary shares upon signing the agreement and a further 3.0 million ordinary shares upon the grant of EL5119 to Mecrus and the delivery to ECT of a formal Sub-Licence from Mecrus to ECT. Podium will be entitled to the issue of approximately 2.2 million ordinary shares upon the completion of proving up of lignite reserves within EL5119, and will hold certain interests in the rights to the in-ground reserves, as outlined below.
Under the agreement with Mecrus, ECT will meet the costs of all exploration work required to prove up the reserves of lignite located within EL 5119 up to “measured reserve” status as defined in The Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves (2004 edition) (the “JORC Code”).
It is estimated the expenditure on EL5119 is projected to be up to $1.0 million over a two to three year period. In return, ECT will acquire from Mecrus all rights in relation to the in-ground coal that may be delineated within EL5119. Under its agreement with Podium, ECT allows Podium to retain a 10% interest in those coal rights, but that interest will dilute down to 7.5% if Podium does not contribute to exploration costs. Once the reserve is proven up, Podium will either contribute its percentage of project costs or its interest will be further diluted.
The Directors of ECT have secured these rights over EL5119 to potentially provide a lignite resource in the Latrobe Valley. Such a resource will be complimentary to commercialisation of the Coldry technology in the Latrobe Valley, and assist in securing partners and finance for those future projects.
Managing Director Mike Davies stated “As we have expanded our discussions with potential partners for the development of a commercial a Coldry plant in Victoria, it has become increasingly clear that access to coal reserves in ECT’s own right is viewed positively. In response the Company has begun a program to bolster its access to coal reserves. In addition to a Memorandum of Understanding (MOU) already in place with GEAC (Loy Yang Power) which encompasses provision of coal amongst other site & service aspects of a project, ECT now adds these arrangements in relation to EL5119. The Company will continue to expand the search, as the Directors consider access to coal reserves adds commercial value to the Coldry technology.”
Legend: 1) Loy Yang Power Station 2) Hazelwood Power Station 3) Yallourn Power Station