Linc offloads exploration permits for $1.5bn5/09/2008 12:00:00...

Linc offloads exploration permits for $1.5bn
5/09/2008 12:00:00 AM. | Nicholas Clydsdale




Linc Energy Limited (LNC) has signed an agreement with the Xinwen Mining Group of China for the sale of its Emerald Teresa coal exploration permits for $1.5 billion. Both Linc and Xinwen are now undertaking a 30-day due diligence period at the end of which a formal sale and purchase agreement will be finalised.

The parties said they were aiming to execute the contract by 5 October 2008 at which time state and federal approvals would be requested.

Linc anticipated the approvals would take 45 days.

Immediately following receipt of government approvals, Xinwen said it had agreed to pay 10%, or $150 million, of the purchase price with the balance to be paid over six further monthly tranches, expected for completion in or about June 2009.

Xinwen Mining Group produce in excess of 35 million tonnes of coal per year and have over 30 billion tonnes of coal reserves. Xinwen also have interest in a number of Chinese steel mills.

Linc managing director Peter Bond said the deal effectively underwrites Linc's GTL commercial aspirations over the coming years, taking the entire company to a new level of opportunity.

Additionally Linc also provided an update to the market on the progress of its Chinchilla GTL demonstration plant.

The company said that over the past week, its commissioning team loaded the catalyst into the FT reactors.

Once the catalyst has been properly reduced and the relevant auxiliary items have completed commissioning the team will commence feeding gas into the FT reactors with the aim of making liquids shortly thereafter.

Mr Bond said the significant steps made over the past few weeks in commissioning the GTL facility have been substantial.

"The next step is now to add gas and produce liquids," he said.

"Once we're at a stage where we are feeding gas into the FT reactors, we are literally days from successfully producing liquids. The Chinchilla GTL: demo plant is really coming together very well and the accomplishments so far have been impressive."

Linc Energy also said it would been included into the Standard & Poors ASX 200 index from 9 September 2008.

By 1148 AEST, shares in Linc Energy had skyrocketed $1.08 or 35% to $4.13.