Australian energy company Altona Energy has acquired a 95% interest in two advanced coal exploration licences in China’s Xinjiang Uygur autonomous region.
Altona has agreed to pay US$8.2 million in tranches on the achievement of development and performance milestones. The company raised part of the money through a share sale to institutional investors via a conditional placing.
“The exploration assets are advanced and are expected to be readily converted into mining licences,” says Altona’s chairman Christopher Lambert. “This is a transformational move for the company, providing the potential to move into production in the near term on a sustainable basis, and generate strong cash flows underpinning Altona’s future, as it actively continues the progression of the bankable feasibility studies on its flagship Arckaringa Project in joint venture with CNOOC-NEI.”
Altona has forged a joint venture with CNOOC New Energy Investment (NEI), a subsidiary of the China National Offshore Oil Corporation (CNOOC), to complete a bankable feasibility study and expedite the project’s development. The company aims to have the exploration licences converted to mining licences by the end of 2012.
The licences were owned by Cheung Wing Kwong, through Cheerful Jade Investment Holdings, which is incorporated in the British Virgin Islands. They are estimated to host more than 1 billion tonnes of coal in areas that are connected to good road infrastructure which is linked to growing local and regional markets. A large portion of the mostly medium to high energy thermal coal reserves is accessible by conventional truck-and-shovel open cut mining methods.
The Xinjiang region in western China is becomingly increasingly important in the coal mining sector. According to the country’s National Reform and Development Commission (NRDC), Xinjiang contains 2.19 trillion tonnes or 40% of the nation’s coal reserves.
Historically, production has been small, but recent NRDC statistics indicate that, as a result of new mine developments since 2001, coal output rose to around 100 million tonnes in 2011. Altona says continuing development of transport and industry infrastructure in western China will see output from existing and new mining operations in Xinjiang grow in coming years.
Altona holds a 49% interest in three exploration licences covering 2500sqkm in the northern portion of the Permian Arckaringa Basin in South Australia through its wholly-owned subsidiary, Arckaringa Energy. The Westfield, Wintinna and Murloocoppie coal deposits lie close to the Adelaide-to-Darwin railroad and the Stuart Highway. The company’s chief aim is to commercialize the Arckaringa coal-to-liquids and power project.