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Clean Global Energy to raise A$4.5m for coal exploration and UCG development

Published: 21:29 29 Mar 2011 EDT

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Clean Global Energy (ASX: CGV) will raise $4,531,440 in a rights issue fully underwritten by Patersons Securities that will be used to drill its coal tenements in Queensland and develop Underground Coal Gasification projects.

The capital raising is via a non-renounceable rights issue of two new shares for every five shares held at $0.07 per share.

In Queensland, the company holds eight granted coal tenements covering 3,280 square kilometres.  Following recent drilling within EPC 1506 in Maryvale, Clean Global has defined a JORC Inferred Resource of 38 million tonnes of coal within an area of approximately 8.2 square kilometres.

The tonnage is likely to increase as it is based on the continuous Bulwer Coal Seam. Clean Global will drill an extra three core holes which could expand the resource to between 150 million tonnes excluding the Condamine Coal Seam and with the resource open to the north.

In underground coal gasification, Clean Global is at the forefront in North America of commercialising underground coal gasification with a partnership with Fortune 500 US energy multinational, the AES Corporation (NYSE: AES), a US$10 billion company.

Financial modelling  of the Oklahoma Energy Project, indicates strong investment returns for two stages of growth following establishment of an initial plant.

In broad terms, Development to full capacity, supplying Syngas for a 300MW plant, would provide an Net Present Value of US$140.8 million, Internal Rate of Return of 20.4% and payback of 9 years on investment of US$140 million.

Clean Global has also signed a binding agreement to provide US$20b Indian energy major, Essar, with UCG technology and expertise under a Technology Licence Agreement. CGE will be free-carried for 20% equity through to a commercial UCG Syngas plant, when CGE will pay for that equity at cost of US$30m. 

This would have a valuation of at least US$100m based on NPV modelling. First licence fees could accrue to Clean Global within six months.

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