Linc Energy has formalized a deal with Exxaro Resources to jointly develop its first commercial underground coal gasification (UCG) project in sub-Saharan Africa, including the use of synthesis gas for power generation and gas-to-liquids, according to company officials.

Under the agreement, Linc said it will receive $19 million in licensing fees, royalties indexed to Australian CPI from Q4 2012, indexes for synthesis gas, $6.7 million pending UCG’s initial regulatory approval in 2017 and engineering partnership fees. Linc Energy officials have also agreed on a minimum 15% equity in the initial project, with an option to buy 49% equity in all operational parts developed by Exxaro which, in turn, will enjoy a non-exclusive license to Linc Energy’s UCG, officials said.

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