ASX Announcement
ASX Announcement
ASX Code: LNC OTCQX Code: LNCGY
30 May 2013
Linc Energy and Exxaro Resources sign formal agreements to develop commercial UCG projects in Sub-Saharan Africa
• Linc Energy Ltd (ASX: LNC) (OTCQX: LNCGY) (“Linc Energy”) and Exxaro Resources Limited (JSE: EXX) (“Exxaro”) sign formal agreements for the joint development of commercial UCG Projects in Sub-Saharan Africa. • Exxaro to be granted a licence to use Linc Energy’s proprietary UCG intellectual property in Sub-Saharan Africa (Region). • Exxaro to pay an upfront Licence Fee of AU$20 million for the Intellectual Property Licence Agreement, a further fee of AU$7 million on the initial UCG project passing agreed performance tests and ongoing Royalties for the synthesis gas produced and sold. • Linc Energy to take up a minimum of 15% equity position in the initial Exxaro UCG Project with an option to obtain up to a 49% equity position in all UCG Projects which Exxaro develops. Linc Energy and Exxaro are pleased to announce that they have entered into formal agreements to jointly pursue Underground Coal Gasification (UCG) as a commercial business to develop energy solutions in the Region. The formal agreements consist of an Intellectual Property Licence Agreement supported by a Services Agreement and a Master Agreement governing key aspects of the relationship. The agreements are conditional upon Exchange Control Approval being granted by the South African Reserve Bank for the payment of the licence fees and royalties for the Intellectual Property. Key aspects of the agreements are: • Exxaro to pay an upfront Licence Fee of AU$20 million once the conditions precedent are met (targeted by end August 2013). A further fee of AU$7 million is payable on the initial Exxaro UCG project passing agreed performance tests, which is expected to occur in 2017. • Linc Energy to be entitled to ongoing Royalties for the synthesis gas produced and sold in return for access to Linc Energy’s UCG technologies in the Region (indexed to Australian CPI from December 2012 and from Final Investment Decision date escalating in line with each project’s relevant country index for power purchases). • Exxaro will be granted a non-exclusive license to use Linc Energy’s UCG intellectual property in the Region and an exclusive licence for certain areas within the Region. • Linc Energy will hold a minimum of 15% equity in the initial UCG project and have the option
to participate up to a 49% equity position in all UCG projects which Exxaro develops. For personal use only use personal For The formal agreements are the culmination of joint concept studies conducted by Linc Energy and Exxaro over the past 18 months under the previously announced MOU in November 2011 and the subsequent Term Sheet between the parties announced in December 2012. The parties
ASX Announcement continued…
ASX Code: LNC OTCQX Code: LNCGY
will implement a business model which optimally combines Exxaro’s strategic interests to expand its coal beneficiation opportunities with Linc Energy’s unique position as a world leader in UCG and downstream process integration know-how. In completing the formal agreements, the companies reconfirmed the importance of their relationship which targets a vast part of the coal-rich African continent for UCG commercialisation. Chief Executive Officer of Linc Energy, Peter Bond, said, “This is a substantial strategic move by Linc Energy to add Africa to its global portfolio to roll-out UCG as an alternative and complementary energy solution. These developments, for the mutual benefit of the partners, shareholders and stakeholders in these developing regions, will bring efficient and reliable energy supply which is an essential part of the economic uplift of the local and regional communities.” Sipho Nkosi, Chief Executive Officer of Exxaro, said, “Exxaro is pleased with this progress in the relationship and the ground-breaking work with Linc Energy, which furthers our strategy of pursuing energy-related opportunities. Reaching this milestone opens the door for the teams to commence with the detailed project work to monetise the inherent value we believe is contained in this clean coal technology.”
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Media contact: Belinda Taylor | GM Corporate Communications e: [email protected] - 2 -
ASX Announcement continued…
ASX Code: LNC OTCQX Code: LNCGY
About Linc Energy Ltd Linc Energy is focused on both conventional and unconventional oil and gas production. The Company owns a diverse and world-class commodity portfolio that includes oil, gas, shale and coal. Conventional oil and gas is focused onshore USA (Alaska, Texas, Louisiana and Wyoming) with current production expected to grow significantly from the Company’s existing reserves. Unconventional oil and gas is focused on our world leading capability in Underground Coal Gasification, the process of converting coal into a valuable synthetic gas in situ. Linc Energy has constructed and commissioned the world’s only UCG to GTL demonstration facility. The Company also owns and operates the world’s only commercial UCG operation in Uzbekistan, which supplies syngas to a nearby power station. Linc Energy is listed on the ASX (Australia) and the OTCQX (USA).
About Exxaro Resources Limited Exxaro Resources is one of the largest South African-based diversified resources groups, with interests in the coal, mineral sands, ferrous and energy commodities. The second-largest coal producer in South Africa with current production of 40 million tonnes per annum, Exxaro is listed on the JSE Limited, where it is a constituent of the Top 40 and the Socially Responsible Investment (SRI) indices respectively. At 31 December 2012, Exxaro Resources had assets of R41,6 billion and a market capitalisation of R60 billion (US$7 billion). With a strong well-executed strategy, top-quartile returns, access to funds and good quality resources, Exxaro Resources provides a unique listed investment opportunity into its chosen commodities. Exxaro was one of the top 10 globally in terms of total shareholder returns in 2012. Exxaro Resources is well on track to add significant value to all their stakeholders by tripling their market value from the 2010 baseline to US$20 billion by 2020. Exxaro has current business interests in South Africa, Botswana, Republic of Congo, China and Australia. www.exxaro.com
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Media contact: Belinda Taylor | GM Corporate Communications e: [email protected] - 3 -