PERTH (miningweekly.com) – Singapore-listed Linc Energy has received the first A$20-million from South Africa-based resources company Exxaro Resources as the second tranche payment under its first underground coal gasification (UCG) commercial agreement.

This payment is in recognition that all conditions precedent contained within the intellectual property licence agreement, services agreement and master agreement executed with Exxaro in May 2013, had now been satisfied.

Linc told shareholders that the satisfaction of all conditions precedent now provided the green light for both parties to continue development of the first joint UCG project following completion of the joint concept study, which was completed in December 2013.

Linc Energy is entitled to a further payment of A$7-million upon the successful completion by the first gasifier of agreed performance tests, as well as ongoing royalties for the synthesis gas produced and equity participation in future projects.

“We are delighted to receive the A$20-million payment from Exxaro, but even more delighted to be moving this exciting project forward to first production. It is an exciting time for Linc Energy shareholders as we begin to commercialise our world leading position in UCG,” said Linc Energy MD and CEO Peter Bond.

“We look forward to further announcements in 2014, that further add value to the UCG commercialisation path, and [the] value chain of our technology and know-how, as we drive UCG to become the next energy platform, which is so urgently needed in regions like South Africa, Central Europe and Asia.”

Linc and Exxaro have agreed to jointly establish a UCG operation in sub-Saharan Africa, with Linc also being given the option to secure equity positions of up to 49% in all of Exxaro’s UCG projects. Linc Energy will hold a minimum of 15% in the first project, which could combine power generation and gas-to-liquids production.