Full Research Report can be accessed on www.independentresearch.com.au INITIAL 2P GAS RESERVES OF 1,153 PJ BOOKED Recent years have seen Eastern Australian natural gas prices more than triple to around A$10/GJ, as well as expecteions that posing a major threat to industries, particularly chemical manufacturers, that rely on natural gas as a feedstock. This provides an ideal opportunity for Leigh Creek Energy Limited (“Leigh Creek” or “the Company”), which is concentrating activities on the 100% owned Leigh Creek Energy Project (“LCEP”. or “the Project”), located over the eponymously named historic coalfield, 550 km north of Adelaide in South Australia. The LCEP is an in-situ coal gasification opportunity (“ISG”, also know as underground coal gasification or “UCG”), with the Company looking to commercialise the significant, recently booked 2P Gas Reserves of 1,153 PJ, and 2C Gas Resources of 1,469 PJ, the largest uncontracted Reserves of any energy developer or producer in Eastern Australia. The Reserves are the result of the soon to be completed Pre-Commercial Demonstration (“PCD”) which has successfully produced commercial quantities of commercial quality (and high calorific value) syngas from a single gasifier operating in a 500m deep coal seam. The final phase of the PCD will be to demonstrate that the gasifier can be successfully shut down and rehabilitated, a critical part of any future commercialisation - ongoing environmental monitoring of the PCD has shown no adverse environmental impacts. Commercialisation scenarios are being considered as part of the Definitive Feasibility Study (“DFS”), which is due for completion in 2020, with production targeted for 2023. Options include the development of an ammonia/urea plant that will use syngas produced from the ISG activities, as well as the potential to provide natural gas into the Eastern Australian market.The Company is currently seeking expressions of interest for the offtake of up to 50 PJ/annum, and for which it has had numerous responses from major gas retailers and end users. Key advantages here for urea production are two-fold - ISG directly produces cheap syngas - chemical manufacturing traditionally cracks methane (natural gas) and combines the products with other gases to produce the required feedstock gases. Secondly, Australia imports over 80% of annual urea consumption of ~2,000 kt; urea is the key nitrogen fertiliser used in Australia. There is also a significant export market for ammonia based fertilisers in Asia. KEY POINTS Very large resource: With 2P Reserves of 1,153 PJ augmented by 2C Resources of 1,469 PJ, the LCEP has the largest uncontracted gas inventory in Eastern Australia, with the potential to supply a long term urea and/or gas supply operation. Commercial quantities of commercial quality gas being produced: The PCD has to date produced commercial grade syngas, containing around 20% methane and between 5% and 10% hydrogen, with “commercial” scale production. In their October 12 release the Company alluded that commercial design rates would be in the order of ~3 MMcf/day per gasifier, however commerciality will also be partly determined by gasifier depth and gas composition amongst others - as of February 19, 2019 peak flow rates of 7.5 MMcf/day had been achieved, more than 7 times the stated goal of producing 1 MMcf/day. Low cost gas production: The LCEP has the potential to provide significant quantities of syngas at a very low cost, providing the basis for potentially good returns from chemical and gas supply operations - research in the US has indicated costs in the order of US$1.10/Mcf for syngas from ISG for one example, and Carbon Energy, in a 2012 presentation, indicated costs (+- 50%) of A$3.50/GJ natural gas from ISG syngas - these are not directly comparable as natural gas (mainly methane) is just one component of the syngas mix. Geology suitable for a low environmental risk project: The Leigh Creek Coalfield is situated in a bowl shaped basin composed of generally impermeable rocks, with no aquifers in the target seams or overburden, no hydraulic connections to external aquifers and no critical land uses, making it suitable for ISG operations with low environmental risks - this strongly differentiates the LCEP from Linc Energy’s (ASX: LNC, now liquidated) problematic Chinchilla Project. This is supported by the South Australian Government’s independent assessment of the project, which recommended that the PCD could proceed. The report included the quote “the Leigh Creek site represents one of the strongest opportunities for low risk UCG anywhere in the world”. Differences between Leigh Creek and Chinchilla are presented in Table 3 of this report. Infrastructure rich: By virtue of the historic coal mining Leigh Creek is connected by tarred highway, standard gauge rail and grid power to Port Augusta, 250 km to the south. There is also ample accommodation and related facilities in the nearby towns of Leigh Creek and Copley. Valuation: We have a base case risked valuation range of A$0.32 to A$0.62/share (with our preferred figure at the upper end), based on Reserve multiples of other juniors with significant gas interests - further upside potential and key price movers will include successful JV negotiations (and the terms thereof) and material progress in the DFS and statutory permitting/ approvals. Sensitivity of our valuation to the risk multiplier is shown on Page 18.