Altona Energy, through its wholly owned Australian subsidiary Arckaringa Energy Pty Ltd has signed a Terms Sheet with CNOOC New Energy Investment Ltd (CNOOC-NEI), to facilitate agreement of a joint venture aimed at the completion of a bankable feasibility study (BFS) for a coal mine and integrated coal-to-liquids and power co-generation project at Arckaringa in South Australia.

It is anticipated that the EJV agreement will be conditional on, amongst other things, applicable Australian and Chinese regulatory and government approvals.

The Terms Sheet, which is not legally binding, includes the 'in principle' agreement that, pursuant to the EJV, CNOOC-NEI will, immediately on the EJV becoming effective, be assigned a 51% interest in Arckaringa Energy's exploration licences EL3360, EL3361 and EL3362 in return for an ongoing commitment to fund all the costs of the BFS. The costs of the BFS will be determined in due course. In the event that CNOOC-NEI withdraws from the EJV prior to completion of the BFS, it is agreed 'in principle' that in certain circumstances Altona will have the right to buy back CNOOC-NEI's interest.

It is expected that the EJV agreement will incorporate mechanisms for the evaluation of other value added processing projects utilising Arckaringa Energy's coal resources, which contain a resource of over 7.5 billion tonnes of coal, (estimated according to the 1984 JORC equivalent code) of which 1.287 billion tonnes at the Wintinna Deposit have been brought up to current JORC standards.

Tags: Altona Energy, CNOOC Limited