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Exxaro Resources Limited : Exxaro Resources and Linc Energy sign Term Sheet for the development of UCG opportunities in Sub Saharan Africa

12/03/2012 | 04:39am US/Eastern
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»  » Exxaro Resources and Linc Energy sign Term Sheet for the development of UCG opportunities in Sub Saharan Africa

• Exxaro Resources and Linc Energy sign Term Sheet for the joint development of UCG Projects in Sub-Saharan Africa.
• Exxaro to be granted a non-exclusive licence to use Linc Energy's proprietary UCG intellectual property in Sub-Saharan Africa.
• Linc Energy to have the option to obtain up to a 49% equity position in all UCG Projects.

Exxaro Resources Limited (JSE: EXX) (Exxaro) is pleased to announce that it has entered into a Term Sheet with Linc Energy Limited (ASX: LNC) (OTCQX: LNCGY) (Linc Energy) to jointly pursue underground coal gasification (UCG) as a commercial business to develop energy solutions in Sub-Saharan Africa (the Region). 

Key aspects agreed to in the Term Sheet are:
• Exxaro will pay an agreed upfront licence fee and ongoing royalties for the synthesis gas produced for the access to Linc Energy's UCG technologies for application in Sub-Saharan Africa (the Region).
• Exxaro will be granted a non-exclusive licence to use Linc Energy's UCG intellectual property in the Region.
• Exxaro will have conditional access to Linc Energy's UCG intellectual property to jointly develop UCG commercial opportunities on their coal resources outside the Region.
• Linc Energy will hold a minimum of 15% equity in the first project and have the option to participate up to a 49% equity position in all UCG projects which Exxaro develops.

The Term Sheet is the culmination of joint concept studies conducted by Exxaro and Linc Energy over the past 12 months under a previously announced MOU between the parties in November 2011. The parties intend to 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.

The parties aim to finalise the binding formal agreements for the development and implementation of these opportunities during the first calendar quarter of 2013 at which point further details of the arrangements will be provided.

Sipho Nkosi, Exxaro's CEO, said, "Exxaro is pleased with this relationship and we are looking forward to some ground-breaking work with Linc Energy, which is in line with Exxaro's strategic aim to include the application of clean coal technologies as part of our future coal growth aspirations."

Peter Bond, CEO of Linc Energy, said, "This is a substantial move towards UCG commercialisation in an area that has embraced and spearheaded the move towards clean energy through its historic dominance in conversion of coal and natural gas to liquid fuels and power and more recently its renewable energy programmes.  To work with Exxaro as our primary partner to bring efficient energy solutions to this resource rich part of the world is an outstanding opportunity. Our joint business model is well-aligned to optimally draw on our respective strengths to make this happen."

About Exxaro Resources Limited
Exxaro Resources is one of the largest South African-based diversified resources groups, with interests in the coal, mineral sands, iron ore and energy markets.

About Linc Energy Limited
Linc Energy is a globally focused, diversified energy company with a strong portfolio of coal, oil and gas deposits. It is Linc Energy's purpose to unlock the value of its resources to produce energy to fuel the future.

A publicly listed company, Linc Energy is the global leader in Underground Coal Gasification (UCG), which delivers a synthesis gas feedstock to supply commercially viable energy solutions - such as electricity, transport fuels and oil production - through gas turbine combined cycle power generation, Gas to Liquids (GTL) Fischer-Tropsch processing and Enhanced Oil Recovery.

Linc Energy has constructed and commissioned the world's only UCG to GTL demonstration facility located in Queensland, Australia. This facility produces the world's only UCG to GTL synthetic diesel fuel. Linc Energy also owns the world's only commercial UCG operation, Yerostigaz, located in Uzbekistan. Yerostigaz has produced commercial UCG synthesis for power generation for 50 years.

Linc Energy is listed on the Australian Securities Exchange (LNC) and can also be traded in the United States via the OTCQX (LNCGY).

For enquiries:
Ernst Venter
Executive General Manager, Business Growth
Tel: +27 12 307 4322
Email: ernst.venter@exxaro.com

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