OilVoice - Altona Energy Announces Joint Venture Agreement with CNOOC New Energy Investment

Altona Energy Announces Joint Venture Agreement with CNOOC New Energy Investment

Friday, June 26, 2009

Altona Energy Plc, the AIM listed Australian based energy company, through its wholly owned Australian subsidiary Arckaringa Energy Pty Ltd (“Arckaringa Energy”), has signed a Terms Sheet with CNOOC New Energy Investment Ltd (‘CNOOC-NEI’), to facilitate agreement of a joint venture (‘the Evaluation Joint Venture’ or ‘EJV’) aimed at the completion of a bankable feasibility study (‘BFS’) for a coal mine and integrated coal-to-liquids and power co-generation project at Arckaringa in South Australia (‘the Arckaringa Project’).

It is anticipated that the EJV agreement will be conditional on, amongst other things, applicable Australian and Chinese regulatory and government approvals. A further announcement in regard of the EJV agreement will be made in due course.

The Terms Sheet, which is not legally binding, includes the ‘in principle’ agreement that, pursuant to the EJV, CNOOC-NEI will, immediately on the EJV becoming effective, be assigned a 51% interest in Arckaringa Energy’s exploration licences EL3360, EL3361 and EL3362 in return for an ongoing commitment to fund all the costs of the BFS. The costs of the BFS will be determined in due course. In the event that CNOOC-NEI withdraws from the EJV prior to completion of the BFS, it is agreed ‘in principle’ that in certain circumstances Altona will have the right to buy back CNOOC-NEI’s interest.

It is expected that the EJV agreement will incorporate mechanisms for the evaluation of other value added processing projects utilising Arckaringa Energy’s coal resources, which contain a resource of over 7.5 billion tonnes of coal, (estimated according to the 1984 JORC equivalent code) of which 1.287 billion tonnes at the Wintinna Deposit have been brought up to current JORC standards (as announced on 1 September 2008).

The Terms Sheet anticipates that the projects identified for development and commercialisation under the EJV will be held by the parties through special purpose vehicles in which Altona’s interest may vary from its 49% interest in the EJV.

Given the ongoing developments with CNOOC-NEI, Altona has deferred the appointment of the BFS Study Engineer until after finalisation of the Terms Sheet. However, important technical studies towards the BFS have been progressed.

Altona Chairman Chris Lambert said, “This is an exciting period for Altona. The signing of the Terms Sheet with CNOOC-NEI and the commencement of the EJV negotiations is a further significant achievement for the Company. We are delighted to be working with CNOOC-NEI.”

“This signing follows a period of extensive due diligence by CNOOC-NEI, which commenced immediately after entering into an initial MOU with Altona in August 2008. Throughout this process we have received a great deal of positive support and assistance from the South Australian government, for which the Company remains extremely grateful.”