Carbon Energy Limited announced it has signed a Master Technology License Agreement with Zhengzhou Coal Industry Group Co Ltd. to be the exclusive underground coal gasification technology partner for a project in Inner Mongolia, China. The Technology License Agreement is a significant milestone for Carbon Energy as it will provide consistent revenue flow from technology license fees, the provision of technical services and ongoing royalties. It will also advance the promotion and establishment of Carbon Energy's keyseam technology as the UCG technology of choice in China and ultimately, globally.

The agreement follows the May 8, 2013 announcement of the signing of the Memorandum of Understanding and Technology Services Agreement between the two companies. The Commercial Scale Project is to produce at least 30PJ per annum and is to be completed in 3 stages over the next 2 years and will be fully funded by the Zhengzhou Group. Carbon Energy will be paid for all services rendered to Zhengzhou during this project.

The project has already received a Mineral Resources Exploration License and UCG Project approval from the Ministry of Land and Resources, P.R.C. and the Inner Mongolian Government. The Haoqin Coal Field has more than seven years of drilling and seismic data available and 3.1 billion tonnes of China Ministry of Land and Resources approved coal resource, covering 184 square kilometres. The project will deliver to Carbon Energy a Technology Fee of $10 million, payable on achieving certain milestones; the payment for technical and engineering services to implement Carbon Energy's UCG keyseam technology and an ongoing royalty stream once revenue is generated from the commercial project.

The commercial scale project producing at least 30PJ per annum will be completed in 3 stages over the next two years: construct and operate one Process Characterisation Panel (PCP) of which the results will be used to confirm the site characterisation before finalisation of the commercial scale under- and aboveground designs; construct and operate two additional panels to confirm the results from the PCP and construct and operate a commercial scale production facility producing at least 30 PJ per annum.