Linc Energy Limited (ASX:LNC)
Brisbane, June 24, 2009 AEST (ABN Newswire) - Linc Energy Limited (ASX:LNC)(PINK:LNCGY) today announced the appointment of UBS Investment Bank to act as manager and advisor on the strategic divestment process of the company's high potential coal mining areas at Emerald (Teresa), Galilee and Pentland, which have recently been subject to numerous inbound inquiries from interested parties. These properties are strategically positioned with resource potential of considerable scale and coal quality.
The tenements, all located in Queensland's main coal-bearing region, comprise a total area in excess of 10,000km2 and contain Coal deposit targets of in excess of 5 billion tonnes.
Linc Energy will duly discontinue its current exclusive negotiation with Chinese coal group Yanzhou Coal (HKG:1171) and related entities. Linc has decided that, though negotiations have been ongoing, the buyer's timetable to complete a purchase is no longer in the best interests of Linc Energy and its shareholders.
With interest from potential bidders increasing and the overall confidence in the coal sector improving significantly, Linc Energy views the best mechanism for delivering value to shareholders for these assets would be via a competitive sales process conducted by UBS instead of continuing the existing negotiation.
The divestment of any of these Queensland assets will not delay or adversely impact Linc's UCG/ GTL commercialisation strategy in South Australia or overseas.
Emerald
The Emerald (Teresa) tenement comprises exploration permits EPC 980, EPC 1226 & EPC 1267. The inferred 852 million tonnes ("mt") resource in accordance with the JORC code* contains coal of coking and thermal grade. Approximately 200mt of the deposit can be mined using open cut methods according to Linc estimates, including 80mt of coking coal. The tenement is well positioned in relation to existing infrastructure with the Emerald-Clermont railway and the Gregory Highway nearby. The location is well serviced by mining support companies due to the close proximity to several open-cut and underground mines already in operation.
Galilee
The Galilee tenement is contained within the area covered by Mineral Development Licence application 372. Linc recently commenced a 39-hole exploration program over its Galilee Basin tenements, after identifying a coal mineralisation exploration target(1) of 3.0 - 3.4 billion tonnes**, including 1.6 - 1.9 billion tonnes identified for potential extraction via open cut mining methods within a depth of 120 metres.
Further to the announcement on June 12 regarding the commencement of the Galilee exploration program, Linc can now confirm that 9 of the 39 exploration holes in the program have been completed. The drilling continues to provide data that validates the existing geological model based on the DME historical drilling data. The initial drilling program will now be completed in early August after which the Company will finalise and release a statement on the coal resource estimate in accordance with the JORC code. It is the company's intention to immediately expand its Galilee program to the next stage of exploration taking it from a 39 to a 101 drillhole program, wherein the full potential open cut deposit will be delineated to indicated status in accordance with the JORC code, with the 101 holes to be completed by year end.
Linc believes the appraisal program will confirm the viability of a long life, low cost, good quality thermal coal open cut mining project of world scale proportions.
Pentland
The Pentland tenement incorporates exploration permit EPC 526 and Mineral Development Licence application 361, containing a total thermal coal resource of 266mt in accordance with the JORC code**, including a 176mt indicated resource. The tenement is well connected to existing infrastructure with a major highway and railway running adjacent to the tenement area.
Linc will provide updates to the market as the divestment process progresses.
(1) In accordance with the requirements of clause 18 of the JORC Code regarding exploration, the following compulsory statement concerning exploration targets is included: "[T]he potential quantity and [quality] is conceptual in nature, that there has been insufficient exploration to define a Mineral Resource and that it is uncertain if further exploration will result in the determination of a Mineral Resource."
* The information in this announcement relating to resources is based on information compiled by Tim Jones who is a member of the Australian Institute of Geosciences and who is a self-employed consultant. Tim Jones has sufficient experience which is relevant to the style of mineralisation and type of deposit under consideration and to the activity which he is undertaking to qualify as a competent person as defined in the 2004 Edition of the "Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves". Tim Jones consents to the inclusion in the report of the matters based on his information in the form and context in which it appears.
** The information in this announcement relating to resources is based on information compiled by Troy Turner, who is a member of the Australian Institute of Mining and Metallurgy and who is employed by Xenith Consulting Pty Ltd. Troy Turner has sufficient experience which is relevant to the style of mineralisation and type of deposit under consideration and to the activity which they are undertaking to qualify as a competent person as defined in the 2004 Edition of the "Australasian Code for Reporting Exploration Results, Mineral Resources and Ore Reserves". Troy Turner consents to the inclusion in the announcement of the matters based on their information in the form and context in which it appears.
Contact
Information for Media:
Mr Peter Bond
Chief Executive Officer
Phone: +61-7-3229-0800
E-mail: pab@lincenergy.com.au
ASX Contact:
Mr Craig Ricato
Company Secretary
Phone: +61-7-3229-0800
E-mail: cr@lincenergy.com.au
Information for investors:
Ms Janelle van de Velde
Manager, Investor Relations & Corporate Communications
Phone: +61-7-3229-0800
E-mail: jcv@lincenergy.com.au
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