Leigh Creek Energy Ltd (AX:LCK) has announced first syngas at the Leigh Creek Energy Project (LCEP) pre-commercial demonstration (PCD). Successful gas flows provide initial validation of LCK’s in-situ coal gasification (ISG) process and the ability to operate in a safe manner while abiding by local environmental legislation. We expect to further de-risk our A$0.34/share valuation (down from A$0.38 after incorporating recent equity placings) on delivery of sustained flow rates over the 60- to 90-day operational period. The PCD phase has potential open sources of funding for full field development. We continue to use a 30% commercial chance of success for LCEP at this stage based on the company’s 2C ISG resource base (2,964PJ) via a combination of small-scale power generation, large-scale local power generation and piped methane sales.
First gas flows from PCD
LCK has successfully initiated the gasifier with the production of first syngas from its PCD on 10 October 2018. Key aims of the PCD include verification of gas composition, measurement of sustainable flow rates, provision of information for the development of a full-scale commercial project, and validation that the ISG gasifier can be operated safely and in an environmentally responsible manner.
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