Ann: Carbon Energy raises $3.48 million under the rights issue-CNX.AX, page-12

Carbon Energy Ltd raises $3.4M with focus on JinHong UCG JV - * (AU)
Carbon Energy Ltdwww.carbonenergy.com.au/
Full Carbon Energy Ltd profile here
Carbon Energy Ltd (ASX:CNX) is an emerging global energy technology provider and services company with expertise in unconventional syngas extraction through utilising its proprietary keyseam® underground coal gasification (UCG) technology.


Carbon Energy Ltd raises $3.4M with focus on JinHong UCG JV

Monday, April 11, 2016 by Proactive Investors

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Carbon Energy Ltd (ASX:CNX) has raised $3,482,757 in total from a rights issue and sub-underwriting of the issue at $0.013 each as cornerstone shareholder Kam Lung Investment Development Company increased its holding to 29.1%.

APP Securities Pty Ltd was a partial underwriter of the issue and Kam Lung had sub-underwritten the rights issue to a maximum of $1,800,000. Kam Lung has also taken up its full entitlement.

Carbon Energy is looking to establish keyseam® as technology of choice for monetising deep coal resources or otherwise stranded coal deposits worldwide in an environmentally and cost effective manner.

It will be a busy year ahead for CNX as it aims to deliver the first project in the China joint venture with JinHong New Energy.

The keyseam technology enables energy to be extracted by gasification; no other UCG process has achieved the results keyseam to date.

In turn, the use of the keyseam technology can provide a low cost gas and energy feedstock for downstream users.


China Joint Venture – JinHong New Energy JV

Next steps in 2016:

- Secure coal leases located near existing gas users
- Conduct site suitability assessment
- Appoint EPCM Company
- Appoint Drilling Company
- Obtain project PRC/local Government approvals
- Formally sign Licensing and service agreements (already agreed)

The aim is to develop a vertically integrated gas company utilising the keyseam technology in China. JinHong is required to contribute US$30 million over three years and is entitled to 70% of dividends.

This will seek to leverage the proven design of keyseam technology, trial results and the growing demand in China for clean energy. It would assist in establishment of keyseam as a commercial technology to be licensed in China.

CNX will only provide the JV with an exclusive technology license on successful ignition of demonstration project. CNX is entitled to 90% of licence fees negotiated before the JV is allocated an exclusive licence and 30% following the allocation of the exclusive licence earned by the JV.


Queensland assets

CNX has significant gas and coal assets in Queensland. Next step is for the Queensland government to confirm CNX has met all ISP recommendations.


Analysis

The funding raised and JV with JinHong New Energy provide a platform to devleop the first fully funded demonstration Project to be established outside of Australia. It will provide a future source of future revenue to Carbon Energy in contracted technology service and licence fees.

Cornerstone investor Kam Lung will support the JV with experienced local business and government contacts.