Leigh Creek Energy (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.
