Carbon Energy entered into a Project Agreement with Antofagasta Minerals S. A. (AMSA) in December 2009 to jointly assess and develop Antofagasta’s deep coal deposit adjacent to the town of Mulpun in Chile using keyseam UCG technology. Chile provides an attractive opportunity for commercial UCG development due to high energy costs and dependency on imported energy. Carbon Energy's keyseam UCG technology can be applied to the low quality, un-minable domestic coals to increase energy security in Chile.
The project site is located in Mulpun in southern central Chile, 800km south of Santiago and east of Valdivia.
The coal deposits' JORC Resources estimate totals 103 million tonnes of coal at 2 metre coal seam thickness cut-off (Measured: 26 million tonnes, Indicated: 37 million tonnes, Inferred: 40 million tonnes).
On the basis of the pre-feasibility study for power generation completed by AMSA, the proposed project aims to supply syngas to a minimum 250MW power station.
Several major project milestones have been achieved including:
Logging Monitoring Wells
Potential for Carbon Energy to Acquire All Rights
Subsequent to completing the project milestones, AMSA completed a major restructure resulting in change of corporate strategy and a decision to cease progress on the project. This presented an opportunity for Carbon Energy who in October 2013 announced the signing of an MOU to potentially acquire all rights, title and interest in and to the Mulpun UCG Project that are held by AMSA (see ASX Announcement 9 October 2013).
The MOU acknowledges that Carbon Energy's ability to acquire AMSA's rights in the project is dependent upon the Company securing third party funding for the project and the acceptance of the commercial terms of the acquisition by AMSA, and gives Carbon Energy until 28 February 2014 to secure third party funding and execute a definitive agreement with AMSA for the acquisition.
Carbon Energy is in discussions with potential equity partners and debt funding providers to fund the project including a party interested in constructing the power station and entering into a long term syngas off-take agreement. Furthermore the Company will be seeking to appoint a Corporate and Asset Finance Advisory Group to assist with securing the necessary project funding partners.
Monitoring well drilling at project site