Untitled - Linc Energy

welcome to 

the future 

welcome to the future 

important notices 2 

chairman’s message 5 

investment highlights 7 

. key details of the offer 8 

2. business overview and objectives 2 

3. the board of directors and corporate governance 20 

4. independent accountant’s report 24 

5. independent geologist’s report 30 

6. independent engineer’s report 52 

7. independent environmental report 76 

8. independent gas to liquids (gtl) consultants report 84 

9. solicitor’s report 90 

0. risk factors 98 

. additional information 02 

2. directors’ statement and signing 0 

3. glossary 2 

4. how to complete the application form 5 

corporate directory 7 

LINC ENERGY | 2006 PROSPECTUS .

.2 

important 

notices 

Certain terms and abbreviations used in this 

Prospectus have defined meanings, which are 

explained in the Glossary in Section 13 of 

this Prospectus. 

This Prospectus is dated 10 March 2006 

and was lodged with ASIC on that date. 

Neither ASIC nor ASX takes any responsibility 

for the contents of this Prospectus or the 

merits of the investment to which this 

Prospectus relates. 

It is important that you read this Prospectus 

carefully in its entirety before deciding to 

invest in Linc Energy. 

Linc Energy will apply within 7 days after the 

Prospectus Date for admission to the Official 

List of ASX and the grant by ASX of Official 

Quotation of Linc Energy’s Shares. 

LINC ENERGY | 2006 PROSPECTUS 

Representation 

No person is authorised to give any information 

or to make any representation in connection with 

the Offer described in this Prospectus other than 

as contained in this Prospectus. Any information 

or representation not so contained may not be 

relied on as having been authorised by Linc 

Energy in connection with the Offer. 

Restrictions 

The distribution of this Prospectus in 

jurisdictions outside Australia may be restricted 

by law and therefore persons who obtain this 

Prospectus should seek advice on and observe 

any such restrictions. Any failure to comply 

with these restrictions may constitute a violation 

of applicable securities laws. This Prospectus 

does not constitute an Offer or invitation in any 

place outside Australia where, or to any person 

to whom, it would be unlawful to make such an 

Offer or invitation. 

Exposure Period 

Applications for Shares under this Prospectus 

will not be processed until after the expiry 

of the exposure period for this Prospectus 

under section 727(3) of the Corporations Act 

(7 days after lodgement of this Prospectus 

or 14 days if ASIC extends the period). 

No securities will be issued in the 7 days after 

lodgement of this Prospectus (or 14 days if 

ASIC extends the period) nor, on the basis of 

this Prospectus, later than the expiry date of 

13 months after the date of this Prospectus. 

Applications for Shares may only be made 

by completing the Application Form 

accompanying this Prospectus. 

The purpose of the exposure period is to enable 

examination of this Prospectus by market 

participants prior to the acceptance of the 

Applications. If the exposure period is extended 

by ASIC, Applications will not be processed until 

after the expiry of the extended exposure period. 

No preference will be conferred on Applications 

received during the exposure period.

Electronic Prospectus 

This Prospectus may be viewed in 

electronic form at the Company’s website 

www.lincenergy.com.au. Persons who 

access the electronic version should ensure that 

they download and read the entire Prospectus. 

Applications may only be made on the 

Application Form attached to or accompanying 

this Prospectus. The Corporations Act prohibits 

any person from passing the Application Form 

on to another person unless it is attached to a 

hard copy of this Prospectus or the complete 

and unaltered electronic version of 


A paper copy of this Prospectus will be provided 

free of charge to any person in Australia who 

requests a copy by contacting the Company or 

the Manager, whose details are contained in the 

Corporate Directory, which is on the inside back 

cover of this Prospectus. 

Independent Advice 

Applicants are recommended to obtain 

independent advice. 

This Prospectus provides information to help 

Applicants decide if they wish to invest in the 

Company and should be read in its entirety. 

If you are in doubt as to the course of action 

that you should take, you should consult your 

stockbroker, solicitor, accountant or other 

professional adviser, before making 

any investment decision. 

There are risks associated with an investment 

in Linc Energy and the Shares Offered by 

this Prospectus must be regarded as a 

speculative investment. For further 

information see Section 10, Risk Factors. 

The Shares Offered under this Prospectus carry 

no guarantee in respect to the return on capital 

invested, payment of dividends or future value 

of the Shares. 

Privacy 

Information that you provide in the Application 

Form will be made available to the Company, 

BBY and the Share Registrar. You are able to 

gain access to such information by contacting 

any of those entities. The information collected 

on the Application Form is being collected for 

the purposes of determining the number of 

Shares the Company should issue to you and 

to allow the Company to act in accordance 

with the instructions you provide on that form. 

Information that you provide in the Application 

Form is provided to printers and mailing houses, 

the ASX and other regulatory authorities. If you 

do not provide the information requested in the 

Application Form the Company may not be able 

to issue Shares to you. 

Reliance on Prospectus Only 

All prior information regarding Linc Energy 

including information contained in annual 

reports, information circulars, brochures, 

websites, media releases or any media 

commentary should not be relied upon 

when deciding whether to invest in Shares 

Offered pursuant to this Prospectus. 

Applicants should only rely on information 

contained in this Prospectus. 

LINC ENERGY | 2006 PROSPECTUS .3

“ 

Linc Energy has 

the potential to 

become a 

dominant player 

in the supply of 

more environmentally 

friendly power, 

diesel and jet fuels 

” 

“Production well at Chinchilla, Queensland.” 

.4 

LINC ENERGY | 2006 PROSPECTUS

chairman’s 

message 

Dear Investor 

On behalf of the Board it is my pleasure to 

present you with this opportunity to invest 

in this initial public offering of Shares in 

Linc Energy. 

Linc Energy is entering an exciting and dynamic 

phase in its plans to bring together the two 

technologies of Underground Coal Gasification 

(UCG) and Gas to Liquid (GTL) processing. 

This initiative has the potential to deliver 

significant commercial quantities of gas for 

the production of ultra-clean, sulphur free 

diesel and aviation fuels to a market exhibiting 

an ever-increasing demand for these products. 

Under this Prospectus, Linc Energy is seeking 

to raise $22,000,000. 

Linc Energy’s primary objectives are to restore 

and expand the UCG facility at Chinchilla, 

Queensland and purchase, install and 

commission a Gas to Liquid demonstration 

plant with a capacity to produce up to 5 barrels 

per day (bpd) of ultra-clean diesel. 

The expansion of the UCG field at Chinchilla, 

Queensland and the purchase, installation 

and commissioning of the GTL plant is stage 1 

of Linc Energy’s business plan. The successful 

completion of stage 1 of Linc Energy’s business 

plan will demonstrate Linc Energy’s ability to 

combine UCG and GTL technologies to produce 

ultra-clean fuels. 

Linc Energy’s commitment to UCG is evidenced 

by its sponsorship of a three year research 

programme at the University of Queensland. 

This arrangement under an ARC Linkage 

Grant has been in place since March 2005. 

This research work will also support Linc 

Energy’s operations at the Chinchilla site. 

Two cornerstones in Linc Energy’s strategic 

plan are the memorandum of understanding 

with Ergo Exergy Technologies Inc. (Ergo 

Exergy) of Montreal, Quebec, Canada and the 

memorandum of agreement with Syntroleum 

International Corporation (Syntroleum) of Tulsa, 

Oklahoma, USA. Ergo Exergy is the provider 

of UCG technology at Linc Energy’s gasification 

plant in Chinchilla and is recognised globally 

as a leading source of this expertise and knowhow. 

Syntroleum, a publicly listed company 

in the USA, has expertise in the field of 

GTL processing. 

By having secured access to the technical 

expertise and capabilities of these companies, 

Linc Energy has strengthened its potential 

to deliver on its business plan to turn coal 

deposits into commercial quantities of diesel 

and jet fuels, in a cost competitive, efficient 

and environmentally responsible way. 

Mr Brian Johnson 

Upon the successful completion of stage 1 

of Linc Energy’s business plan, which is being 

funded by this capital raising, Linc Energy will 

seek further funding in order to proceed with 

stage 2. The Company currently envisages 

stage 2 as involving the construction of a 

GTL facility with an approximate capacity 

of 20,000 bpd of ultra-clean diesel. Stage 3 

of Linc Energy’s business plan involves the 

expansion of Linc Energy’s operations to the 

world market. 

Linc Energy’s Board believes that by effectively 

combining the UCG and GTL processes and 

drawing on the capabilities of a dedicated, 

committed and experienced Board and 

management team, the Company will be in 

a position to capitalise on its significant coal 

deposits and the growing world demand for 

cleaner petroleum products. 

I commend this Prospectus to you and invite 

you to join us as an investor as we pursue this 

great future for the Company. 

Yours sincerely 


Chairman 


“ 

The UCG operation 

in Chinchilla is by 

far the largest and 

the longest ever in 

the western world 

“Injection well at Chinchilla, Queensland.” 

.6 


”

investment 

highlights 

Increased 

Demand for Oil 

World oil demand is 

increasing and it is expected 

that demand for diesel and 

aviation fuels will grow at a 

significant rate in the future. 

Strategic Technology 

Linc Energy will bring 

together a world first 

combination of the two 

industrial processes of 

UCG and GTL. The successful 

combination of these 

technologies will enable 

stranded underground 

coal deposits to produce 

Syngas which can be 

converted into fuels. 

Low Cost Gas 

The UCG process is designed 

to have lower capital and 

operating costs than natural 

gas or Coal Bed Methane 

producers, resulting in 

cheap Syngas. 

One of a Handful 

of GTL Companies 

Linc Energy will seek 

to purchase, install and 

commission a demonstration 

GTL plant. The plant will 

be designed to demonstrate 

the feasibility of using Linc 

Energy’s UCG Syngas for 

conversion into ultra-clean 

diesel through the GTL 

process. By using UCG, 

Linc Energy plans to become 

one of only a handful of 

GTL companies with its 

own abundant gas source. 

Extensive Coal Prospects 

Linc Energy has extensive 

mining tenements across 

Queensland, Australia 

with potentially large coal 

deposits. These tenements 

provide Linc Energy with 

the potential to produce 

substantial quantities of 

Syngas that can be used 

in the GTL process. 

Environmentally 

Friendly Fuels 

The diesel and jet fuels 

produced by GTL are 

sulphur free, virtually 

odourless and, on 

combustion, have 

emissions low in 

NOx and particulates. 

Expansion Potential 

The potential exists to 

duplicate the production 

process in other areas 

of Australia and overseas. 

This will depend on the 

suitability of the relevant 

coal deposits and related 

geological structures. 

Power Generation 

Linc Energy will have 

the potential to install 

gas turbines fed on 

UCG Syngas. 


1 key 

.8 

. . The Offer 

details of the offer 

Linc Energy Offers for subscription 88,000,000 Shares at an Offer Price of $0.25 per Share to raise $22,000,000 

before expenses to the Offer. 

.2. Key Dates 

Date of Prospectus 10 March 2006 

Offer opens 17 March 2006 

Offer closes 27 April 2006 

Shareholding statement expected to be dispatched 2 May 2006 

Expected ASX quotation 5 May 2006 

.3. Capital Structure 

Details 

Offer Price $0.25 

Shares on issue prior to the Offer 232,997,383 

Shares offered under this Prospectus 88,000,000 

Total Shares on issue on completion of the Offer 320,997,383 

Market capitalisation at the Offer Price $80,249,346 

Options exercisable at $0.25 

expiring 2 years from listing 

.4. Purpose of the Issue 

The purpose of the Issue is to provide 

Linc Energy with the necessary working 

capital to successfully complete stage 1 of 

its business plan as described in Section 2 

of this Prospectus. 

The funds raised under this Prospectus 

will be used to fund: 

. the restoration and expansion of 

the UCG production field; 

2. the purchase of the land surrounding 

the UCG operation at Chinchilla; 

3. the completion of an environmental 

impact statements (EIS) relating to 

the stage 2 business plan which is 

the construction of a 20,000 barrels 

per day (bpd) GTL facility at 

Chinchilla, Queensland; 

4. exploration drilling for coal resources; 


5. the purchase, installation and 

commissioning of a GTL demonstration 

plant producing synthetic liquid fuels 

from Linc Energy’s UCG Syngas; 

6. completion of an initial feasibility study 

of Linc Energy’s stage 2 business plan 

which is the construction of a 20,000 

bpd GTL facility on the Chinchilla, 

Queensland site; 

7. provision for payment to Ergo Exergy; 

8. complete final report and full costing 

for installation of a 40mw gas turbine 

power generator; 

9. repayment of debt; 

0. providing the Company adequate 

working capital for the next 2 years; and 

. paying the costs associated with Linc 

Energy’s admission to the Official List 

of the ASX. 

1,000,000

.5. Use of Funds 

In the two years following admission to the Official List of the ASX, the Directors intend to apply the funds raised as follows: 

Activity/Project Use of funds AUD 

UCG gas field expansion 2,200,000 

Land purchase 1,750,000 

Completion of EIS 400,000 

Coal expansion & drilling 1,000,000 

Purchase, installation, commissioning & operation of a GTL demonstration plant 6,000,000 

Pre-feasibility study 1,000,000 

Provision for payment to Ergo Exergy 650,000 

Costing report for a GTG 50,000 

Repayment of debt 1,600,000 

Working capital 5,850,000 

Offer costs 1,500,000 

Total 22,000,000 

Upon the successful completion of this capital raising, the Directors believe that Linc Energy will have sufficient working capital to carry 

out its objectives as set out in this Prospectus. 


1 key 

. 0 

details of the offer (cont) 

.6. An Application for Shares 

Applications will only be accepted on the 

Application Form included in or accompanying 

this Prospectus or accompanying the electronic 

version of this Prospectus. Detailed instructions 

on completing the Application Form can 

be found in Section 14 of this Prospectus. All 

Applications must be for a minimum of 8,000 

Shares ($2,000.00). Applications may be made 

for additional Shares in multiples of 1000 

Shares ($250.00). 

Applications must be accompanied by a personal 

cheque or bank draft in Australian currency 

drawn on an Australian branch of an Australian 

represented bank for an amount equal to $0.25 

for each Share applied for. Cheques must be 

made payable to “Linc Energy Limited – Share 

Issue Account” and crossed “Not Negotiable”. 

Payments by cheque will be deemed to have 

been made when the cheque is honoured by 

the bank on which it is drawn. 

If an Application Form is not completed 

correctly, or if the accompanying payment is 

for the wrong amount, it may still be accepted 

by Linc Energy. Linc Energy’s decision as to 

whether to accept the application or how to 

construe, amend or complete it, shall be final, 

but no Applicant will be treated as having offered 

to purchase more Shares than indicated by the 

amount of the cheque for Application Monies. 


Application Forms together with Application 

Monies for Shares should be forwarded to: 

Linc Energy Ltd Share Offer 

C/- Link Market Services 

Locked Bag A 4 

Sydney South, NSW 235 

Applicants are urged to lodge their Application 

as soon as possible. Application Forms must 

not be circulated to prospective investors unless 

attached to a copy of this Prospectus. 

.7. Australian Stock 

Exchange Limited 

Linc Energy will apply to the ASX, within 

seven days of the date of this Prospectus for 

Linc Energy to be admitted to the Official List 

of the ASX and for Official Quotation of the 

Shares on issue in Linc Energy and the Shares 

to be issued pursuant to this Prospectus. 

If approval is not granted by the ASX for 

admission of Linc Energy to the Official List 

before the end of 3 months after the date of 

this Prospectus (or such longer period as is 

permitted by the Corporations Act with the 

consent of the ASIC), Linc Energy will not 

allot or issue any Shares and will repay all 

Application Monies within the time prescribed 

by the Corporations Act without interest. 

The fact that the ASX may admit Linc Energy to 

its Official List is not to be taken in any way as 

an indication by the ASX of the merits of Linc 

Energy or the Shares Offered by this Prospectus. 

.8. Allotments 

Shares will be allotted as soon as possible 

after the Closing Date. The Directors reserve 

the right, in their absolute discretion, to issue 

the full amount of Shares applied for by 

Applicants, to issue any lesser number 

or to decline any Application. 

Within 5 Business Days after the Closing 

Date, the Directors will either: 

• accept an Application and issue 

the number of Shares applied for; 

• accept an Application in part and issue 

the Shares that have been accepted in 

part and return all excess Application 

Monies to the Applicant; or 

• decline an Application and return all 

Application Monies to the Applicant. 

No Shares Offered pursuant to this Prospectus 

will be issued until valid Applications have 

been received for all Shares offered under this 

Prospectus and the ASX has confirmed that it 

will admit the Shares Offered pursuant to this 

Prospectus to quotation. Application Monies 

will be held in a bank account on behalf of 

Applicants until the Issue of the Shares Offered 

pursuant to this Prospectus. No interest 

will be paid to Applicants on Application 

Monies returned. 

.9. Oversubscription 

No allowance has been made to issue additional 

Shares should the Offer be oversubscribed. All 

monies received in respect of Applications for 

Shares received after all the Shares have been 

allocated will be returned by Linc Energy within 

the time prescribed by the Corporations Act 

without interest.

. 0. Underwriting 

This Offer is not underwritten. 

. . CHESS 

Linc Energy will apply to ASX to participate 

in the securities clearing house electronic 

sub-register system known as CHESS. 

CHESS is operated by the ASTC in accordance 

with the ASX Listing Rules and the ASTC 

Settlement Rules. 

Under CHESS, Linc Energy will not issue 

certificates to Shareholders who elect to hold 

their Shares on the CHESS sub-register. After 

allotment of Shares, Shareholders will receive a 

CHESS holding statement. The CHESS holding 

statements, which are similar in style to bank 

account statements, will set out the number of 

Shares allotted to each Shareholder pursuant to 

this Prospectus. The statement will also advise 

Shareholders of their HIN and explain, for future 

reference, the sale and purchase procedures 

under CHESS. Further statements will be 

provided to Shareholders to reflect any changes 

in their shareholding in Linc Energy during a 

particular month. 

. 2. Stamp Duty 

No stamp duty is payable by Applicants 

under this Prospectus. 

. 3. Dividend Policy 

The ability of Linc Energy to pay dividends 

depends on the achievement of a satisfactory 

level of profitability. 

The Directors can give no assurance as to the 

amount, timing, franking or payment of any 

future dividends by Linc Energy. The capacity 

to pay dividends will depend on a number 

of factors including future earnings, capital 

expenditure requirements and the financial 

position of Linc Energy. 

It is the Directors’ intention to review this policy 

from time to time and commence the payment 

of a regular dividend once Linc Energy is able 

to generate a substantial and sustainable level 

of cash flow after allowing for capital 

expenditure and other commitments. 

The Company has adopted a dividend 

reinvestment plan, which is described in 

more detail in Section 11.10 of this Prospectus. 

. 4. Risks of Investment 

An investment in Linc Energy should be 

considered a speculative investment and is 

subject to a number of risks. While the Directors 

intend to use prudent management techniques 

to minimise the risks to Shareholders, no 

assurances can be given by Linc Energy as 

to the success or otherwise of its business. 

Applicants should consider the risk factors 

identified in this Prospectus, particularly those 

identified in Section 10 of this Prospectus before 

applying for Shares. Applicants should seek 

independent professional advice in relation to 

their own particular circumstances. 

. 5. Restricted Securities 

The ASX may, as a condition of granting 

Linc Energy’s application for admission to 

the Official List, classify certain Shares 

as Restricted Securities. 

If so, prior to the Official Quotation of Linc 

Energy’s Shares, the holders of the Restricted 

Securities will be required to enter into 

agreements with Linc Energy not to do, or omit 

to do, any act which would have the effect of 

transferring effective ownership and control 

of any Restricted Securities, for a period 

determined by the ASX, without first obtaining 

the prior written consent of the ASX. The 

Company’s Share Registrar will be requested 

to provide a holding lock on the securities 

classified as Restricted Securities and not to 

remove the holding lock without the ASX’s 

written consent. 

. 6. Taxation Implications 

The Directors do not consider that it is 

appropriate to give Applicants advice regarding 

the taxation consequences of being issued 

Shares under this Prospectus as it is not 

possible to provide a summary of the possible 

taxation positions of all Shareholders. Linc 

Energy, its advisers and officers do not accept 

any responsibility or liability for any taxation 

consequences to Applicants in respect of the 

issue of the Shares Offered pursuant to this 

Prospectus. Applicants should consult their 

own professional tax adviser in connection 

with the taxation implications of the issue of 

Shares pursuant to this Prospectus. 

. 7. Enquiries in relation to 

this Prospectus 

Any questions concerning the issue 

of Shares pursuant to this Prospectus 

should be directed to: 

Mr David Smith 

BBY Limited 

Level 7, Met Centre 

60 Margaret Street 

Sydney NSW 2000 

Phone 02 9226 0 2 

Fax 02 9226 0 08 

Email des@bby.com.au 


. 2 

2 business 

2. . Introduction 


overview and objectives 

Linc Energy’s corporate vision is to become a 

world-leading producer of ultra-clean diesel and 

jet fuels. Linc Energy aims to achieve this vision 

by bringing together, for the first time anywhere 

in the world, the two technologies known as 

Underground Coal Gasification (UCG) and 

Gas to Liquids (GTL). 

Linc Energy intends to use the UCG process 

to exploit stranded coal deposits that are 

considered sub-economic as they are too far 

from market, too deep or are not of the quality 

required for traditional coal markets. UCG has 

the potential to overcome these issues, enabling 

Linc Energy to develop significant tracts of coal 

that are currently regarded as being of 

sub-economic value. 

The UCG process can be used to turn stranded 

coal reserves into energy by gasifying the coal 

“in situ” (underground). The resulting gas, 

called Syngas, can be used as feedstock for a: 

• Gas to Liquids (GTL) processing plant 

to produce diesel and jet fuels; and 

• Gas Turbine Generator (GTG) 

to generate electricity. 

This unique combination of UCG and GTL has 

the potential to become a significant alternative 

energy source. The gas is cheap, the resources 

abundant and the application process may be 

capable of duplication in Australia and around 

the world. Combining UCG and GTL has the 

potential to create a new and reliable source of 

ultra-clean environmentally responsible fuels. 

The cheap and abundant Syngas that can 

be delivered by the UCG process is the key 

that Linc Energy will seek to exploit to enable 

it to cost effectively produce ultra-clean 

diesel fuels. 

The further potential upside for Linc Energy 

will lie in its capacity to replicate this combined 

application of UCG and GTL, not just in 

Australia, but in strategic locations around 

the world such as the USA. 

2.2. Background 

In 1999 Linc Energy established a UCG facility 

at its mining development licence (MDL 309) 

at Chinchilla, Queensland. Linc Energy first 

produced Syngas at this site on 26 December 

1999 and achieved the following significant 

milestones during a period of 30 months of 

continuous gas production: 

• 95% recovery of coal resource; 

• 75% of total energy recovery; 

• 9 injection / production wells; 

• 13 monitoring wells; 

• average well depth of 130m; and 

• work was undertaken in compliance with the 

existing Environmental Management Plan. 

UCG is the gasification of coal underground. 

This gasification process produces a gas that 

can be used for commercial purposes, such as 

the production of diesel and jet fuel. The main 

advantage of UCG is that there is no need to 

mine the coal resource by bringing it to the 

surface in the usual way. The gasification of the 

coal to turn it into gas takes place completely 

“in situ” (underground). 

The process of UCG was developed in the former 

Soviet Union where it has been used for power 

generation for more than 40 years. There are 

currently two UCG plants of significant size still 

operating in the former Soviet Union, one in 

Siberia and the other in Uzbekistan. 

Linc Energy is in a unique position to 

now advance UCG in the western world as: 

• it has been at the forefront of UCG application 

in the western world for the last 6 years; 

• through an MOU with Ergo Exergy, it has 

engaged Dr Michael Blinderman, one of 

the key Russian scientists at the centre of 

the former Soviet Union’s UCG program. 

Dr Blinderman has over 25 years experience 

in the practical application of UCG 

technology; and 

• Dr Blinderman leads an experienced team 

from Ergo Exergy capable of implementing 

the process of UCG. Linc Energy has entered 

into an MOU with Ergo Exergy, which is 

summarised in Section 11.7 of 


The development of commercially viable GTL 

plants requires one fundamental component 

– “cheap and abundant” gas. Linc Energy aims 

to access cheap and abundant Syngas 

through application of the UCG process. 

2.3. Linc Energy’s Business Plan 

As part of its long term business plan, Linc 

Energy intends to use the Syngas produced 

by the UCG process at its Chinchilla site to: 

. produce liquid fuels such as diesel and 

jet fuel; and 

2. generate electricity. 

Linc Energy’s business plan involves a number 

of stages. The purpose of the fund raising in this 

Prospectus is to fund stage 1 of Linc Energy’s 

business plan which, in essence, is a feasibility 

study for the future development of a 20,000 

barrel per day GTL facility. Linc Energy will use 

the funds raised under this Prospectus to expand 

its UCG operation at Chinchilla and construct 

a GTL pilot plant. This effectively takes Linc 

Energy to the cusp of constructing a 20,000 bpd 

UCG to GTL ultra-clean fuel (diesel) facility 

at Chinchilla. 

Linc Energy will also commission a report 

on the costs of purchasing, installing and 

commissioning a 40mw gas turbine generator 

at the MDL 309 site at Chinchilla, Queensland.

2.3. Stage 

The funds raised under this Prospectus will 

be used to: 

• restore and expand the UCG facility at 

(MDL 309) Chinchilla to produce Syngas; 

• purchase, install and commission a GTL 

demonstration plant with a target production 

capacity of 1 to 5 bpd; 

• complete the feasibility study on the 

20,000 bpd GTL facility as proposed in 

Linc Energy’s stage 2 business plan; 

• complete an EIS – upon Linc Energy’s 

Chinchilla’s site and covering a 20,000 

bpd GTL facility at that site; and 

• complete a coal drilling exploration 

programme on and around the Chinchilla site. 

Stage 1 of Linc Energy’s business plan aims to 

demonstrate the feasibility of combining UCG 

and GTL and to undertake a feasibility study 

to assist Linc Energy in securing funding for 

the stage 2 business plan which involves the 

construction of a 20,000 bpd GTL facility 


2.3. . GTL Plant 

Liquid fuel has been produced from gas that 

simulates the UCG Syngas produced at MDL 

309. This liquid fuel was produced by the 

University of Kentucky under contract with 

Linc Energy. The utilisation of UCG in a pilot 

GTL plant at MDL 309 will be a significant step 

forward towards building a full commercial 

GTL plant at a later stage. Therefore, as part of 

stage 1, Linc Energy intends to build a 1 to 5 

bpd GTL demonstration plant which will use the 

UCG Syngas as feedstock. The demonstration 

plant will not have the capacity to produce 

enough fuel to be sold commercially. However, 

the Company intends to demonstrate the 

potential to use UCG Syngas in the GTL process 

and the environmentally superior qualities of 

this ultra-clean fuel. 

2.3. .2 GTG (power generation) 

Linc Energy believes that it is technically feasible 

to utilise UCG Syngas to produce power from 

gas turbines (refer Shedden Uhde report in 

Section 6 of this Prospectus). It is part of Linc 

Energy’s stage 1 business plan to finalise its 

costings in relation to the purchase, installation 

and commissioning of a 40mw GTG. 

Depending on the results of the report 

commissioned in relation to GTG and subject 

to finance, Linc Energy may, at an appropriate 

time to be determined by the Directors, seek to 

purchase, commission and install a 40mw GTG. 

Electricity generated by the GTG will be available 

to be sold into the electricity grid creating 

cashflow for the Company. Applicants should 

note that the funds raised under this Prospectus 

will not fund the purchase, installation and 

commissioning of a GTG. 

2.3.2 Stage 2 

In essence, stage 1 is a feasibility study that 

will enable Linc Energy to determine the process 

required to construct a 20,000 bpd GTL facility. 

The construction of such a facility is stage 2 

of Linc Energy’s long term business plan. 

Applicants should note that the funds raised 

under this Prospectus will not be used to fund 

stage 2 of Linc Energy’s business plan. 

2.3.3 Stage 3 

Stage 3 of the business plan is focused on 

taking Linc Energy’s UCG and GTL diesel and 

power process to the world market. This will 

potentially have significant possibilities in 

locations such as the USA and China. 

In addition, Linc Energy will complete further 

exploration to assess if its coal reserves in 

Chinchilla will support an expansion programme 

capable of feeding a 30,000 to 40,000 bpd 

GTL facility. 

Applicants should note that the funds raised 

under this Prospectus will not be used to fund 

stage 3 of Linc Energy’s business plan. 

2.4. The Oil and Gas Story 

Linc Energy intends to produce low cost and 

abundant Syngas via UCG from stranded 

coal resources. It intends to use that cheap 

Syngas to produce ultra-clean fuels. 

Over the past year there has been a steady 

increase in the price of oil. The cause of this 

price rise has been attributed to the increased 

demand for oil by developing countries, such 

as China. The solution to this “oil scarcity” 

problem is the development of alternative 

energy sources. 

GTL, as an alternative energy source, is currently 

used in various countries around the world. 

Currently Sasol Limited (a South African fuel 

company) is providing over 25% of South 

Africa’s fuel requirements by GTL and Coal 

to Liquids (CTL). Shell has one GTL plant in 

Malaysia and is intending to build a 140,000 

barrel per day facility in Qatar in the Middle East. 

The Sasol Chevron joint venture is also building 

a large GTL plant in Qatar, which is nearing 

completion. 

LINC ENERGY | 2006 PROSPECTUS . 3

. 4 

2 

Over the past 6 months the price of natural 

gas in North America has fluctuated between 

US$6.5 to US$13 per gigajoule. The Directors 

believe that it is not viable to undertake GTL 

with natural gas feedstock at these prices 

because to economically recover the high 

capital expenditure involved in GTL plants, large 

amounts of cheap feedstock gas are required. 

The Directors believe that using UCG will 

provide Linc Energy with its competitive 

advantage. By utilising the UCG process, 

Linc Energy intends to gasify coal reserves 

to turn that coal into cheap and abundant 

Syngas. Importantly, Linc Energy believes 

that the Syngas can be produced at 

Chinchilla for US$0.50 cents per gigajoule. 


business overview and objectives (cont) 

FIGURE . – The process of UCG is detailed below: 

2.5. UCG 

. Two wells are drilled into the coal seam, typically at more than 100m 

(300 feet) deep and approximately 30m (90’) apart.These wells are then 

joined inside the seam. 

3. This resulting syngas moves under pressure towards the second well 

(called the production well), where it is extracted and cleaned for the 

upstream processes. 

The process of converting underground coal into 

Syngas is called Underground Coal Gasification. 

UCG has been utilized in the former Soviet 

Union for more than 40 years for heating and 

electricity generation. However, the process 

has never been exploited commercially in the 

western world, primarily as a consequence of 

the historically low prices of oil and gas which 

have effectively discouraged large-scale 

development projects. 

The UCG process is chemically similar to 

surface gasification of coal, which was a very 

common practice from before the turn of the 

century up until post World War II, where it 

was eventually replaced by cheaper natural gas. 

The process of above ground coal gasification 

entails coal mining and then gasifying coal in 

gasification reactors above ground. It is still 

common in many parts of the world as a means 

of creating Syngas for industrial processes such 

as in chemical plants. 

The main difference between the two gasification 

processes is that in UCG the underground 

cavity becomes the reactor. That is to say, 

the gasification of the coal takes place in a 

controlled environment underground instead of 

on the surface. The underground gasification 

2. The coal is ignited at the bottom of the first well. Compressed air is 

introduced and this well becomes the injection well. The heat produced 

by the combustion of coal in the air and fuel-rich environment produces a 

combustible synthetic gas or syngas. 

4. The gasification is carefully controlled, keeping the pressure inside the 

cavity below the groundwater hydrostatic pressure. This effectively provides 

a water seal around the reactor. Additional injection and production wells 

can be easily added, readily expanding the gasification front to increase 

gas production.

process significantly reduces the cost of 

conventional above ground gasification by 

eliminating the need for coal mining and the 

infrastructure of a surface gasification plant. 

Linc Energy engaged Shedden Uhde to prepare 

a report on technical issues relating to UCG and 

GTL. The report is included in Section 6 of this 

Prospectus. In relation to UCG, Shedden 

Uhde stated: 

“ The process of UCG appears to be 

technically feasible with no technical 

barriers being identified at this stage.” 

2.6. Using UCG Syngas to 

produce fuels 

Linc Energy will seek to use UCG 

Syngas to produce fuels by using the 

Fischer-Tropsch Process. 

2.6. The History of GTL 

The core technology for converting gas to 

liquids was developed in Germany in 1923 and 

is known as the Fischer-Tropsch Process after 

its inventors Franz Fischer and Hans Tropsch. 

They proved that hydrogenation of carbon 

monoxide over iron, cobalt or nickel catalysts 

at 180-250°C at atmospheric pressure, results 

in a product mixture of hydrocarbons ranging 

from LPG to a liquid phase diesel fuel and finally 

lubricants and waxes. 

CLEAN 

UP 

UCG 

< COAL 

UCG 

GASIFICATION 

SYNTHESIS GAS > 

FISCHER-TROPSCH 

REACTOR 

FIGURE 2. – The UCG to GTL process 

GASEOUS PRODUCTS > 

METHANE, 

ALCOHOLS 

AND DIESEL 

WAXY 

HYDROCARBON 

PRODUCTS 

(LIQUIDS) 

2.6. . Germany 

Commercial production using the Fischer- 

Tropsch Process commenced in Germany in 

1936 using synthesis gas derived from lignite 

and coal. During World War II, annual output 

of fuels exceeded 500,000 metric tonnes 

confirming the technical feasibility of 

producing fuels and chemicals by this route. 

2.6. .2 South Africa 

South Africa’s “Sasol 1” plant came into 

production in the late 1950s using synthesis 

gas derived from above ground coal gasification, 

with the initial design capacity of some 5,300 

bpd of synthetic fuels. A further two plants, 

“Sasol 2” and “Sasol 3” were commissioned 

in the mid 1980s producing an additional 

combined capacity of some 150,000 bpd of 

synthetic fuels which currently accounts for over 

25% of South Africa’s national fuel requirements. 

2.6. .3 Present day GTL plants 

Present day GTL plants include the: 

• Mossgas plant in South Africa, 

commissioned in 1991 and producing 

22,500 bpd of synfuels; and; 

• Shell plant in Bintulu, Malaysia, 

commissioned in 1993 and producing 

14,700 bpd. 

PRODUCT 

UPGRADE 

STEAM 

GENERATION 

SLURRY 

PHASE 

PRODUCT 

UPGRADING 

JET FUEL > 

DIESEL > 

NAPHTHA > 

2.6. .4 Future GTL plants 

GTL plants currently being developed include: 

• the Sasol designed Qatar 35,000 bpd 

plant presently under construction 

and almost complete; 

• Qatar Shell GTL plans to invest in offshore 

facilities and an onshore plant that produces 

140,000 bpd of GTL products; and 

• Sasol and a Chinese consortium signed an 

MOU to undertake the pre-feasability study 

for the development of two coal-to-liquids 

plants in China. 

2.6.2 The Fischer Tropsch Process 

In simplified terms, the Fischer Tropsch Process 

converts Syngas into liquid fuels through a 

catalytic reaction using cobalt as the preferred 

catalyst. The gas reacts with the cobalt, joining 

together simpler “gas” hydrocarbon chains 

to create longer “liquid” hydrocarbon chains 

or syncrude. This syncrude is further refined 

to provide a range of desirable hydrocarbon 

products such as diesel and jet fuels, waxes, 

naphtha and LPG. These end products are 

substantially free of sulphur, olefins, metals, 

alcohols and aromatics. 

The process Linc Energy intends to develop, 

combines UCG and GTL and is called Coal 

to Liquids as the initial energy source is coal. 

However, GTL is an umbrella term covering 

all gas to liquids technologies. 

As part of its ongoing GTL testing program 

at the University of Kentucky, Linc Energy has 

successfully produced diesel from gas that 

simulates the Chinchilla UCG Syngas. 

GTL technologies for converting UCG gas 

into liquid fuels are commercially available 

from a number of companies around the world. 

Linc Energy has entered into a memorandum 

of agreement with one of these companies, 

Syntroleum International Corporation. 

Syntroleum has designed, built and operated 

a demonstration GTL fuels plant in Tulsa, 

Oklahoma, USA using its unique air based 

GTL process. Linc Energy’s agreement with 

Syntroleum will see the two companies further 

develop this process at Linc Energy’s Chinchilla 

site in Australia. 


. 6 

2 


Linc Energy believes that its association with 

Syntroleum will enhance and expedite the 

development of Linc Energy as a leading 

ultra-clean diesel producer. 

Of the products that can potentially be produced 

using UCG Syngas in the GTL process, Linc 

Energy will seek to produce diesel and jet fuels. 

2.6.3 What is Syngas 

Natural Gas is CH4 being 1 carbon atom and 

4 hydrogen atoms. Syngas for the purpose 

of GTL production purposes is 1 carbon atom 

and 2 hydrogen atoms. As this Syngas is the 

simplest hydrocarbon building block, it is 

sought after by GTL producers and chemical 

plants. The unique advantage of UCG is that it 

is capable of producing Syngas which would 

suit a number of applications including GTL. 

2.6.4 GTL Expert’s Report 

Attached at Section 8 of this Prospectus is a 

report prepared by R Swanepoel, a chemical 

engineer with expertise in GTL processes. 

The report concludes that: 

“ based on the analyses performed so far on 

the Chinchilla project, it would appear that the 

UCG Syngas is suitable for the commercial 

scale production of synthetic fuels.” 

2.7. Using UCG Syngas to 

Generate Power 

Linc Energy will commission a report on the cost 

of purchasing, installing and commissioning 

a 40mw GTG. Linc Energy believes that the 

commissioning of a GTG could produce early 

cash flow for Linc Energy through the sale of 

power to the grid. Linc Energy could also use 

the electricity generated by a GTG to power 

the GTL facility, thus creating a potential cost 

saving for the UCG and GTL site operations. 

In relation to the GTG, Shedden Uhde stated, 

in its report attached in Section 6 of this 

Prospectus: 


“ Gas to power generation is an established 

technology proven in Syngas service 

applications. Several turbine vendors have 

experience in supplying units for applications 

similar to that proposed by Linc Energy. 

Therefore, the firing of the Syngas in the 

modified gas turbine is well proven and 

technically feasible.” 

2.8. The Environmental Advantages 

The UCG process is a more environmentally 

friendly way of exploiting coal resources as 

compared to traditional mining methods. 

Moreover, the fuels Linc Energy will seek 

to produce using UCG Syngas are more 

environmentally friendly than traditional 

fuel sources. 

2.8. UCG 

Traditional methods of coal mining require 

the coal to be extracted from the ground. 

Traditional mining methods are intrusive 

and can irreparably damage the mined land. 

The land on which UCG is undertaken is 

not “mined” in the traditional sense. When 

the UCG process is finished the pipes are 

removed and the wells are capped. 

FIGURE 3. – Gas Turbine Generator (GTG) 

2.8.2 GTL 

Linc Energy plans to use UCG Syngas as 

feedstock for a GTL demonstration plant to 

produce diesel and jet fuel with the following 

key features: 

. sulphur free; 

2. low in particulates; 

3. low in nitrogen oxides; 

4. low in metals; and 

5. low in carbon monoxide emissions. 

Synthetic diesel has essentially zero sulphur, 

a high cetane index (in excess of 70) and 

less than 5% aromatics. One study (US EIA 

“International Energy Outlook” 2004) has 

estimated that synthetic diesel will result in 

40 to 50% reduction in hydrocarbon emissions, 

9% reduction in nitrogen oxides and a 30% 

reduction in particulate emissions as compared 

to conventional refinery low sulphur diesel. 

Therefore it is seen as a highly desirable fuel 

from an environmental perspective. 

2.8.3 Expert’s Report 

Section 7 of this Prospectus, contains a 

report on the “Environmental Performance 

of UCG”. That report details the benefits and 

impacts of UCG operations. It also discusses 

issues relevant to Linc Energy’s proposed 

UCG operations at Chinchilla.

2.9. The Life of the Project 

Linc Energy engaged an independent geologist, 

Coalsearch Consultants, to investigate and 

report on the quantity and quality of coal 

in Linc Energy’s tenements. Linc Energy’s 

MDL 309 currently has an in situ Indicated 

Coal Resource estimated at 16,000,000 tonnes 

within the mineral development licence area 

available for development to produce Syngas. 

Linc Energy intends to explore and drill this 

and its surrounding tenements with the aim of 

expanding its coal resource base considerably. 

2.9. Coal Tenements 

Linc Energy has carefully planned its future 

development by acquiring the rights to 

large, strategically located coal prospects 

across Queensland. 

TABLE . Linc Energy Coal Tenements 

The Company has existing tenement rights to 

extensive deposits of underground coal which 

may be capable of providing a large supply of 

Syngas via UCG. Coalsearch Consultants has 

reported that in relation to most of Linc Energy’s 

coal deposits: 

“ coal occurrences are known to occur from 

unambiguous data. Whilst excellent potential 

exists in most of them, more exploration 

needs to be completed before resource 

estimates meeting JORC requirements 

can be confirmed.” 

Lease Location Status 

Chinchilla EPC 635 15km S of Chinchilla - Surat Basin Granted 

This additional exploration work will largely 

require core sampling and testing of coal 

within these areas to provide knowledge of 

both coal quantity and quality at appropriate 

drill hole spacing. For more information on the 

exploration program planned by Linc Energy 

refer to Coalsearch Consultants report in Section 

5 of this Prospectus. Linc Energy will use a 

portion of the funds raised under this Prospectus 

to fund the exploration programme. See Section 

2.11 of this Prospectus for further details. 

The table below shows the different tenements, 

their location, their status and the coal in situ 

in compliance with the JORC Code. 

Coal in situ (Million Tonnes) 

Indicated Inferred Total 

Chinchilla MDL 309 15km SE of Chinchilla - Surat Basin Granted 16 16 

Tipton 1 EPC 704 30km SW of Dalby - Surat Basin Granted 

Tipton 2 EPC 902 30km S of Dalby - Surat Basin Granted 

Tipton 3 EPC 938 60km SW of Dalby - Surat Basin Application 

Wilkie 1 EPC 897 40km SE of Dalby - Surat Basin Granted 

Wilkie 2 EPC 898 30km SE of Dalby - Surat Basin Granted 

Wilkie 3 EPC 899 30km NW of Dalby - Surat Basin Granted 

Teresa EPC 980 20km NW of Emerald - SW Bowen Basin Granted 

Wowam EPC 908 40km N of Biloela - Biloela Basin Granted 

Jambin EPC 909 25km N of Biloela - Biloela Basin Granted 

Rathdowney EPC 910 40km S of Ipswich - Moreton Basin Granted 

Pentland MDL 361 220km SW of Townsville - Galilee Basin Application 161 78 239 

Galilee EPC 854 120km NW of Townsville - Galilee Basin Granted 326 326 

Pentland EPC 526* 220km SW of Townsville - Galilee Basin Granted 

TOTAL 77 404 58 

*Linc Energy has a 99% interest in this tenement 


. 8 

2 

PENTLAND 

TOWNSVILLE 



GALILEE 

MACKAY 

BILOELA 

CHINCHILLA 

SURAT BASIN 

COAL BEARING 

BASINS 

GLADSTONE 

MORETON IPSWICH 

FIGURE 4. – Linc Energy Coal Tenements 

2.9.2 Exploration Programme 

Linc Energy’s Chinchilla gasification field has 

16 million tonnes of Indicated Coal Resource 

suitable for UCG operation within MDL 309. 

BRISBANE 

In order to expand the UCG field at Chinchilla, 

Linc Energy has prepared two exploration 

programmes, each of which Linc Energy intends 

to carry out during stage 1 of its business plan. 

Programme 

The first exploration programme aims to expand 

the Indicated Resource existing to the limits 

of MDL 309 and beyond into the surrounding 

EPC 635 area. The program consists of 

an estimated 20 non-cored drill holes and 

11 cored drill holes. 

Programme 2 

The second exploration programme aims to 

define an Indicated Resource within EPC 704 

(displayed over the page), which is located 

less than 40km to the South East of the current 

Chinchilla project location. 

FIGURE 5. – Surat Basin tenements showing MDL 309 

Programme 2 will involve an estimated 

14 non-cored drill holes and 20 cored 

drill holes. 

Further information on the drilling programmes 

can be found in Coalsearch Consultants’ report 

at Section 5 of this Prospectus. 

2. 0. Cost Effective Fuel Production 

Combining UCG and GTL is potentially a cost 

effective way of producing fuels. Successfully 

using UCG Syngas to generate power will allow 

Linc Energy to further benefit from the Syngas 

it intends to produce. 

2. 0. Diesel Production 

As there is a direct correlation between the cost 

of Syngas and the cost of the end product, the 

cheaper the source of Syngas, the cheaper the 

cost of the end product will be. 

The Directors believe that the main drivers 

in establishing a profitable GTL process are: 

. access to an abundant source of 

cheap Syngas; and 

2. the sale price per barrel of diesel. 

Linc Energy estimates that its indicative price 

for Syngas at Chinchilla will be approximately 

US$0.50 cents gigajoule. This estimate is 

based on Linc Energy’s experience in producing 

Syngas at Chinchilla for a continuous period of 

30 months and feasibility studies conducted 

by the Company. 

2. 0.2 Power Generation 

The Directors are of the view that the largest 

single cost in running a power generation plant 

(in particular a gas turbine) is the cost of gas 

to feed the gas turbine generator. Using UCG 

Syngas as feedstock for a GTG may assist the 

Company to potentially develop a profitable and 

competitive electricity generation plant.

FIGURE 6. – EPC 704 Location of current and proposed exploration drilling 

2. . The Offer in Summary 

This initial public offer is for the Offer of 

88,000,000 Shares at $0.25 per Share to 

raise $22,000,000. 

The funds raised under this Prospectus will 

be utilised to achieve stage 1 of Linc Energy’s 

business plan. The stage 1 business plan 

involves: 

. the restoration and expansion of UCG 

operations at MDL 309; 

2. the purchase of the land surrounding 

the UCG operations at Chinchilla, which 

includes the land on which MDL 309 

is situated; 

3. the commissioning of an environmental 

impact statement in relation to the 

construction of a 20,000 bpd GTL facility. 

The EIS is a standard part of the approval 

process for the construction of such a facility; 

4. exploration drilling for coal resources suitable 

for UCG development; 

5. the purchase, installation and commissioning of 

a GTL demonstration plant producing diesel and 

jet fuels which uses UCG Syngas as feedstock; 

6. the completion of a pre-feasibility study covering 

various aspects of GTL development including: 

• test work to pilot plant evaluations; 

• UCG compatibility; 

• process design and optimisation; 

• capital expenditure and operational 

expenditure estimations; 

• equipment selection and procurement; and 

• economic and financial analysis, 

designed to assist Linc Energy in determining 

the requirements necessary to develop a 20,000 

bpd GTL facility; 

7. provision for payment to Ergo Exergy; 

8. commissioning a final report in relation to 

the costing for the purchase, installation and 

commissioning of a 40mw gas turbine generator; 

9. repayment of debt owing to Newtron Pty Ltd; 

0. providing the Company with adequate working 

capital for the next 2 years; and 

. paying the costs associated with Linc Energy’s 

admission to the Official List of the ASX. 

2. 2. The Linc Energy Opportunity 

Linc Energy is entering into an exciting and dynamic 

phase in its plan to bring together, for the first time 

anywhere in the world, the two technologies of UCG 

and GTL. Linc Energy has acquired strategic coal 

tenements to potentially provide it with a long term 

supply of coal suitable for the UCG process. In 

addition, Linc Energy’s MDL 309 is situated close to 

the electricity grid, allowing Linc Energy to sell any 

electricity it may generate into the grid. 

With the combination of Linc Energy’s coal tenements, 

Board of Directors and relationships with Ergo 

Exergy and Syntroleum, Linc Energy is positioned 

to become a dominant player in the supply of more 

environmentally friendly power, diesel and jet fuel 

than is otherwise available using traditional 

production methods. 


.20 

3 the 

3. . The Board 


board of directors and corporate governance 

The members of the Board have been selected 

for their broad range of complementary skills 

and expertise in industry and commerce and 

their ability to draw on this background for the 

benefit of the Company and its Shareholders. 

Their individual and collective capabilities have 

been ably demonstrated in the following areas; 

• a broad range of industries, including 

the mining, exploration, resources, 

and financial services sectors; 

• implementation of both operational and 

corporate strategic initiatives; 

• financial management; 

• corporate governance principles; 

• growing shareholder value; and 

• dealing at the highest levels of government. 

The Board can also demonstrate considerable 

domestic and overseas experience in the 

resource sector, especially the extractive 

minerals industry. 


Chairman 

Non-Executitve Director 

Mr Johnson is a civil engineer with extensive 

experience in the construction and mining 

industries in Australia, South East Asia and 

North America. He has held a number of 

directorships in listed public companies. 

As a major shareholder and Chief Executive, 

Mr Johnson was instrumental in establishing 

Portman Limited’s presence in the iron ore 

industry between 1991 and 1994, in developing 

mines at Koolyanobbing and Cockatoo Island. 

Mr Johnson personally partnered with Mr 

Lang Hancock in development and operation 

of McCamey’s Monster iron ore mine in the 

Pilbara, prior to its sale to BHP and the Woodie 

Woodie manganese mines in the same area. 

Mr Johnson has considerable experience in 

dealing with Asian steel mills and major trading 

houses through his previous involvement in the 

production of coking coal, manganese and 

iron ore. 

Mr Johnson is Deputy Chairman (and 

was previously chief executive officer) of 

Mt Gibson Iron Limited. 

Mr Johnson was appointed to the Board 

in March 2006. 

Mr Peter Adam Bond 

Managing Director 

Mr Bond has a successful track record in 

the coal and gold mining industries both in 

Australia and overseas. 

Building on his early engineering background, 

he has gained a unique knowledge and 

understanding of the coal mining industry 

over the course of a diversified career spanning 

more than 20 years. His various companies are 

recognised in the mineral processing industry 

for both innovation and efficiency. Mr Bond 

has experience in the design, installation, 

commissioning and operation of complex 

processing plants and projects. 

Mr Bond’s business interests include mineral, 

mining and associated operations in Australia 

and South East Asia. 

Mr Bond was appointed to the Board in 

October 2004.


Chairman 


Mr John Charles Harkins 


Mr Peter Bond 

Managing Director 

Mr Harkins commenced his professional career 

as a graduate health and environment specialist 

following a studentship with the government 

service in the United Kingdom. He later moved 

to the private sector as an internal corporate 

consultant with the Rank Organisation based 

in their corporate headquarters in London. 

This involved delivery of risk management 

advisory services to the board and executive 

management of the Rank Organisiation’s diverse 

national and international manufacturing and 

processing companies. 

Mr Harkins relocated to Australia more 

than 20 years ago and established his own 

consultancy practice, specialising in the 

emerging area of risk management. He went 

on to act as an advocate in both State and 

Federal Industrial Relations Commissions 

with a particular focus on the issue of industry 

superannuation. During this time he served on 

a number of company boards, later becoming 

inaugural chief executive officer of CARE Super, 

one of Australia’s largest pension funds with 

more than $1.6 billion in investments under 

management. 

He subsequently went on to establish his own 

investment facilitation company Facilitec Pty 

Ltd, which focuses on the areas of investor 

relations, private capital raisings and mergers 

and acquisitions. The company has undertaken 

mandates both in Australia and overseas across 

a range of sectors including gold mining, 

agricultural manufacturing, biotechnology 

and construction. 

Mr Harkins was appointed to the Board in 

October 2004. 

Mr John Harkins 


Mr Ken Dark 

Non-Executive Director 

Mr Dark began his career in the area of 

industrial and electrical engineering. He went 

on to become a recognised specialist in his field 

in the aluminium smelting industry, where he 

led project-engineering teams both in Australia 

and Canada including work with Alcan Inc. 

He also holds tertiary qualifications in industrial 

electronics and electronics engineering. 

He later established a highly successful 

business in the fuel distribution industry. 

During that time he represented fuel 

distributors on the national marketing 

operations and buying committees of 

two major fuel companies. 

Mr Dark was appointed to the Board in 

October 2004. 

Mr Ken Dark 

Non-Executive Director 

Mr Karl Schlobohm 

Company Secretary 

Mr Karl Schlobohm 

Company Secretary 

Mr Schlobohm is a Chartered Accountant with 

over 15 years experience in corporate taxation, 

corporate advisory and management consulting. 

Through the course of his career, he has worked 

with companies listed on the ASX, international 

projects and multinational companies. He 

has developed an expertise in areas such as 

mergers and acquisitions, business and strategic 

planning, due diligence, independent expert 

reports, corporate and business restructures, 

start-up companies, projects and corporate 

secretarial duties. 

Mr Schlobohm is a key stakeholder in a number 

of start-up companies seeking to commercialise 

their research and technology and has 

therefore gained first-hand experience of the 

various elements and processes of emerging 

businesses. 

Mr Schlobohm is a Director of Prosperity 

Advisers, a financial services firm specialising 

in chartered accounting, wealth creation, and 

retirement and estate planning. He is also the 

Non-executive Chairman of Australasian Retail 

Media Group Ltd, and the Company Secretary 

for the ASX listed Agenix Ltd. 

Previously he worked for Ernst & Young and 

then Grant Thornton Brisbane as a Senior 

Manager and in May 2002 was appointed a 

Director in charge of the firm’s corporate and 

management advisory team. 

Mr Schlobohm holds degrees in Commerce and 

Economics, and a Masters of Taxation. He is a 

member of the Institute of Chartered Accountants 

in Australia, and the Australian Institute of 

Company Directors. 


.22 

3 the 

board of directors and corporate governance (cont) 

3.2. Corporate Governance 

The Board is committed to maximising 

performance, generating appropriate levels 

of Shareholder value and financial return. 

The Board is therefore concerned to ensure 

that the Company is properly managed to protect 

and enhance Shareholder interests and that the 

Company, its Directors, officers and employees 

operate in an appropriate environment of good 

corporate governance. 

Accordingly, the Board has adopted corporate 

governance policies and practices designed to 

promote responsible management and conduct 

of the Company. 

The main policies and practices adopted by the 

Company are summarised below. In addition, 

many governance elements are enshrined in 

the Constitution. 

Board Appointment and Composition 

In general, it is the Board’s policy that the 

number of Directors must not be less than three. 

The Board is currently made up of four Directors, 

one of whom is an Executive Director. 


Board Responsibilities 

The Board has the ultimate responsibility 

to approve policy regarding the business 

and affairs of the Company for the benefit 

of Shareholders. 

The Board delegates management of the 

Company’s resources to the management team, 

under the leadership of the Managing Director 

to deliver the strategic objectives and goals 

determined by the Board. 

In discharging their duties, Directors are 

provided direct access to and may rely upon 

executive management and outside advisers. 

Board committees and individual Directors 

may seek independent professional advice 

at the Company’s expense for the purpose of 

the proper performance of their duties. 

Continuous Disclosure Policy 

The Company places a high priority on 

communication with Shareholders and is aware 

of the obligations it will have once publicly 

listed under the Corporations Act and the ASX 

Listing Rules to keep the market fully informed 

of information which is not generally available 

and which may have a material affect on the 

price or value of the Company’s Shares. 

The Company has adopted a continuous 

disclosure policy, which takes effect upon the 

Company being admitted to the Official List of 

the ASX and establishes procedures to ensure 

that Directors and management are aware 

of and fulfil their obligations in relation to 

the timely disclosure of material price 

sensitive information. 

Remuneration of Non-Executive 

Directors 

Non-Executive Directors are paid an annual fee 

for their service on the Board and all committees 

of the Board within the maximum aggregate sum 

for such Directors approved from time to time by 

Shareholders. The current maximum aggregate 

sum is $250,000 per annum, which is intended 

to provide the Board with scope to appoint 

new Directors in the future. It is not intended to 

distribute this full amount by way of fees in the 

current year. 

Audit Committee 

The membership of the Company’s Audit 

Committee is made up of three Directors 

namely, Mr Ken Dark, Mr John Harkins and 

Mr Brian Johnson. 

The Audit Committee monitors and reviews 

the effectiveness of the Company’s controls 

in the areas of operational and balance sheet 

risk and financial reporting. 

The Audit Committee discharges these 

responsibilities by: 

• overseeing the adequacy of the controls 

established by executive management to 

identify and manage areas of potential risk 

and to safeguard the assets of the Company; 

• overseeing the Company’s relationships 

with the external auditor and the external 

audit function generally; and 

• evaluating the processes in place to ensure 

that accounting records are properly 

maintained in accordance with statutory 

requirements and financial information 

provided to Shareholders and the Board is 

accurate and reliable.

Members of management and the external 

auditors attend meetings of the Audit Committee 

by invitation. The Audit Committee may also 

have access to financial and legal advisers in 

accordance with the Board’s general policy. 

Nomination and Remuneration 

In making decisions regarding the appointment 

of Directors, the Board periodically assesses 

the appropriate mix of skills, experience and 

expertise required on the Board and assesses 

the extent to which the required skills and 

experience are represented on the Board. 

The Board may obtain information from and 

consult with management and external advisers 

as it considers appropriate. 

The Board is responsible for determining and 

reviewing compensation arrangements for the 

Directors and management. The Board assesses 

the appropriateness of the nature and amount 

of emoluments of such officers on a periodic 

basis by reference to relevant employment 

market conditions. The overall objective is 

to ensure maximum Shareholder benefit by 

the retention of a high quality Board 

and management. 

Details of the agreements between the Company 

and its key executives are set out in Section 11.7 


ASX Guidelines 

The Company will continue to review the 

ASX Corporate Governance Council’s Principles 

of Good Corporate Governance and Best Practice 

Recommendations and intends to progressively 

implement such of those recommendations that 

it considers appropriate taking account of the 

ongoing exigencies of the business. 


.24 

4 independent 

6 March 2006 

The Directors 

Linc Energy Ltd 

Level 7 

10 Eagle Street 

BRISBANE QLD 4000 

Dear Sirs 


accountant’s report 

INVESTIGATING ACCOUNTANT’S REPORT 

1. INTRODUCTION 

This report has been prepared at the request of the Directors of Linc Energy Ltd (“Linc” or “the Company”) for inclusion in a 

Prospectus to be dated on or about 9 March 2006 (“the Prospectus”) relating to the proposed issue (“the Issue’) by Linc of up to 

88,000,000 shares to be issued at a price of 25 cents per share to raise approximately $22,000,000. 

2. BASIS OF PREPARATION 

This report has been prepared to provide investors with information on the historical results (Income Statement) as noted in 

Appendix 1 and the Balance Sheet of Linc and pro-forma Balance Sheet of Linc as noted in Appendix 2 and 3. The historical 

and pro-forma financial information is presented in an abbreviated form, insofar as it does not include all of the disclosures 

required by Australian Accounting Standards applicable to annual and interim financial reports prepared in accordance with the 

Corporations Act 2001. 

This report does not address the rights attaching to the shares to be issued in accordance with the Prospectus, nor the risks associated 

with the investment. BDO has not been requested to consider the prospects for Linc, the shares on offer and related pricing issues, 

nor the merits and risks associated with becoming a shareholder and accordingly, has not done so, and does not purport to do so. 

BDO accordingly takes no responsibility for those matters or for any matter or omission in the Prospectus, other than responsibility 

for this report. Risk factors are set out in Section 10 of the Prospectus. 

3. BACKGROUND 

The primary purpose of the Offer is to provide the Company with the necessary working capital to: 

(a) continue exploration of the Company’s tenements to confirm JORC reserve requirements; 

(b) purchase and install a pilot Gas to Liquids plant and complete feasibility testing; 

(c) purchase strategic land holdings; 

(d) fund ongoing project expenses and corporate overheads; 

(e) repay shareholder loans; and 

(f) enable the Company to seek admission to the official list of Australian Stock Exchange Limited (“ASX”). 

Potential investors should read the Prospectus in full that includes an Independent Geologist’s report, an Independent Engineer’s 

report, an Independent Environmental report, an Independent Gas to Liquids Consultants Report and a Solicitor’s Legal Report. 

Further details on significant contracts entered into by the Company are referred to in the Legal Report in Section 9 of the Prospectus 

and the Additional Information section 11 of the Prospectus. 

4. SCOPE OF EXAMINATION 

You have requested BDO to prepare an Independent Accountant’s Report on: 

(i) The Income Statement of Linc for the six months ended 31 December 2005 and the year ended 30 June 2005; 

(ii) The Balance Sheet of Linc as at 31 December 2005; and 

(iii) The pro forma consolidated statement of financial position of Linc at 31 December 2005 adjusted to reflect the following pro 

forma adjustments as if they had occurred on 31 December 2005:

(a) The pro forma statement has been prepared to reflect the estimated net cash position of the company based on an assumption 

that $22,000,000 is raised as a minimum under the Prospectus; 

(b) The expensing of capital raising costs against equity raised pursuant to the Prospectus estimated to $1,500,000 

(based on a minimum subscription of $22,000,000); and 

(c) As at February 28, 2006 the company has on issue convertible notes totalling $7,719,921 and as outlined above $1,600,000 

of the total funds raised under the Prospectus will be applied to repaying in part these notes. The remaining balance 

($6,119,921) is to be repaid by the issue of 203,997,383 shares to Newtron Pty Limited. 

The interim financial statements of Linc for the six months ended 31 December 2005 from which certain financial information has 

been extracted and disclosed in Appendices 1, 2 and 3 have been subject to audit review by PricewaterhouseCoopers – Chartered 

Accountants whilst the statutory financial statements for the year ended 30 June 2005 were audited by PricewaterhouseCoopers. 

The audit review opinion issued on the financial statements for the period ended 31 December 2005 was unqualified as was the audit 

report issued on the financial statements for the year ended 30 June 2005 however in both instances the audit opinion included an 

emphasis of matter in relation to the company’s ability to continue to trade as a going concern. 

Note 1 to the financial report for the year ended 30 June 2005 includes the following paragraph as to the basis of preparation of the 

financial report: 

“ At 30 June 2005, the company incurred a loss for the year, and had net current liabilities of $6.1 million. The main liability of the 

company is a convertible note of $6.0 million payable to Newtron Pty Ltd. That company has agreed not to call for repayment of 

the loan until 30 June 2006. The directors are currently undertaking a capital raising exercise in conjunction with an IPO which will 

allow the company to work with Syntroleum Corporation Inc under the terms of a non-binding Memorandum of Agreement with 

that organisation to establish a Coal to Liquids business. The development of that business is dependent however on the capital 

raising efforts being successful. As a result of these matters, there is significant uncertainty as to whether the company can continue 

as a going concern and therefore whether it will be able to realise its assets and settle its liabilities and commitments in the normal 

course of business and at the amounts stated in the financial report. However, the Directors are confident that the company will be 

successful in its capital raising efforts and are of the opinion that the company is able to pay its debts as and when they fall due as 

a result of the financial support pledged in writing by Newtron Pty Limited and, accordingly have prepared the financial statements 

on a going concern bases”. 

We note however that net asset position of the company as disclosed in the pro forma balance sheet (refer Appendix 2) discloses a 

surplus of current assets over current liabilities of $18,811,000 and a net asset position of $17,958,000. We also note that the purpose 

of the offer includes providing the company with working capital reserves of approximately $5.8 million. Based on the successful 

capital raising and the pro forma balance sheet in our opinion the company will have sufficient funds to then settle it’s liabilities as 

and when they fall due. 

We have conducted a review of the historical financial information and the pro-forma financial information in accordance with 

Australian Auditing Standards AUS 902 “Review of Financial Reports” and conducted such enquiries and procedures, which 

we considered necessary for the purposes of this report. We made such enquiries and performed such procedures as we, in our 

professional judgement, considered reasonable in the circumstances including: 

• A review of workpapers, accounting records and other documents; 

• A review of the assumptions and adjustments used to complete the pro-forma statement of financial position; 

• A comparison of consistency in application of the recognition and measurement principles in accounting standards and other 

mandatory professional reporting requirements in Australia and the accounting policies adopted by the Company as disclosed in 

Appendix 3 of this report; and 

• Enquiry of directors, management and others. 

The review procedures undertaken by BDO in our role as Independent Accountants were substantially less in scope than that of an 

audit examination conducted in accordance with generally accepted auditing standards. 

Our review was limited primarily to an examination of the historical financial information, the pro-forma financial information, 

analytical review procedures and discussions with senior management. A review of this nature provides less assurance than an 

audit and, accordingly, this Report does not express an audit opinion on the historical financial information or pro-forma financial 

information included in this Report or elsewhere in the Prospectus. 


.26 

4 independent 

In relation to the information presented in this Report: 

(i) support by another person, corporation or an unrelated entity has not been assumed; 

(ii) the amounts shown in respect of assets do not purport to be the amounts that would have been realised if the assets were 

sold at the date of this Report; and 

(iii) the going concern basis of accounting has been adopted. 

5. SUBSEQUENT EVENTS 

To the best of our knowledge and belief, and based on the work we have performed as described in the scope paragraphs above, 

there have been no material transactions or events subsequent to 31 December 2005, other than those included in our report, which 

would require comment on, or adjustment to, the financial information referred to in our report or that would cause such information 

included in this report to be misleading. 

6. STATEMENTS 

In our opinion, the pro forma statement of financial position as set out in Appendix 2 presents fairly the pro-forma statement of 

financial position of Linc as at 31 December 2005 in accordance with accounting methodologies required by Australian Accounting 

Standards on the basis of assumptions and transactions set out in Appendix 3. 

No opinion is expressed on the historical results, as shown in the Income Statement in Appendix 1 and the historical net asset 

position, as shown in the Balance Sheet in Appendix 2 except to state that nothing has come to our attention which would require 

further modification to the financial information in order for it to present fairly the results and net assets of the periods identified. 

7. DECLARATION 

BDO does not have any pecuniary interests that could reasonably be regarded as being capable of affecting its ability to give an 

unbiased opinion in relation to this Report. BDO will receive a professional fee for the preparation of this Report. 

The Partners of BDO do not hold nor have any interest in any ordinary shares of the Company. 

Unless specifically referred to in this Report, or elsewhere in the Prospectus, BDO was not involved in the preparation of any other 

part of the Prospectus and did not cause the issue of any other part of the Prospectus accordingly, BDO makes no representations or 

warranties as to the completeness or accuracy of the information contained in any other part of the Prospectus. 

BDO has consented to the inclusion of this Report in the Prospectus in the form and context in which it appears. The inclusion of this 

Report should not be taken as an endorsement of the Company or a recommendation by BDO of any participation in the Company 

by an intending subscriber. 

Yours faithfully 

BDO 

C M J BRYAN 

Partner 

accountant’s report (cont) 

LINC ENERGY | 2006 PROSPECTUS

APPENDIX 

INCOME STATEMENT 

SUBJECT TO 

AUDIT REVIEW 

SIX MONTH ENDED 

3 DECEMBER 2005 

$ 

AUDITED YEAR ENDED 

30 JUNE 2005 

$ 

Revenues from ordinary activities 325,859 254,000 

Other expenses from ordinary activities (1,926,645) (2,682,672) 

Net loss before tax (1,600,786) (2,428,672) 

Income tax attributable to net loss - - 

Net loss after tax (1,600,786) (2,428,672) 

Total changes in equity other than those resulting from transactions with owners as owners ( ,600,786) (2,428,672) 

APPENDIX 2 

STATEMENTS OF FINANCIAL POSITION 

Current Assets 

NOTE 

SUBJECT TO AUDIT REVIEW 

SIX MONTH ENDED 


$000s 

PRO FORMA AUDITED 

YEAR ENDED 

30 JUNE 2005 

$000s 

Cash assets 3 21 18,921 

Receivables 387 387 

Other 81 81 

Total Current Assets 489 19,389 

Non Current Assets 

Property, plant and equipment 77 77 

Other 88 88 

Total Non Current Assets 165 165 

Total Assets 654 19,554 

Current Liabilities 

Payables 324 324 

Interest bearing liabilities 4 7,408 - 

Other 254 254 

Total Current Liabilities 7,986 578 

Non Current Liabilities 

Interest bearing liabilities 18 18 

Provisions 1,000 1,000 

Total Non Current Liabilities 1,018 1,018 

Total Liabilities 9,004 1,596 

Net (deficiency in) surplus in assets (8,350) 17,958 

Equity 

Contributed equity 5 7,414 33,722 

Accumulated losses (15,764) (15,764) 

Total equity (8,350) 17,958 


.28 

4 independent 

APPENDIX 3 

NOTES TO THE INCOME 

STATEMENT AND 

BALANCE SHEET 

accountant’s report (cont) 

. Statement of Significant 

Accounting Policies 

(a) Basis of Accounting 

The audited Statements of Financial Performance 

and Position have been prepared in accordance 

with applicable accounting standards, the 

Corporations Act 2001 and mandatory 

professional reporting requirements in Australia 

and we have made disclosures as considered 

necessary. They have also been prepared on 

the basis of historical cost and do not take 

into account changing monetary values. The 

accounting policies have been consistently 

applied unless otherwise stated. 

(b) Income Tax 

The company adopts the liability method of 

tax effect accounting whereby the income tax 

expense is based on the profit from ordinary 

activities adjusted for any permanent differences. 

Timing differences, which arise due to the 

different accounting periods in which items 

of revenue and expenses are included in the 

determination of accounting profit and taxable 

income, are brought to account as either a 

provision for deferred income tax or as future 

income tax benefit at the rate of income tax 

applicable to the period in which the benefit will 

be received or the liability will become payable. 

Future income tax benefits are not brought to 

account unless realisation of the asset is assured 

beyond any reasonable doubt. Future income tax 

benefits in relation to tax losses are not brought 

to account unless there is virtual certainty of 

realisation of the benefit. 

The amount of benefits brought to account or 

which may be realised in the future is based 

on the assumption that no adverse change 

will occur in income taxation legislation and 

the anticipation that the company will derive 

sufficient future assessable income to enable 

the benefit to be realised and comply with the 

conditions of deductibility imposed by the law. 


(c) Property, Plant and Equipment 

All items of property, plant and equipment 

are carried at cost. 

Any gain or loss on the disposal of property, 

plant and equipment assets is determined as the 

difference between the carrying amount of the 

asset at the time of disposal and the proceeds 

from disposal, and is included in the results 

of the company in the year of disposal. 

Depreciation is calculated on a diminishing 

value basis, for all asset classes with the 

exception of computer software, to write off the 

net cost or revalued amount of each item on a 

basis approximating its expected useful life to 

the company. Computer software is depreciated 

on a straight line basis. 

The rate of depreciation that have been applied 

to the individual items of property, plant and 

equipment across the various asset classes are 

as follows: 

Asset class 

Depreciation 

method 

(d) Tenement Exploration, Evaluation 

and Development Costs 

Costs incurred in the exploration for, and 

evaluation of, tenements for suitable resources 

are carried forward as assets provided that one of 

the following conditions is met: 

• the carrying values are expected to be 

justified through successful development and 

exploitation of the area of interest; or 

• exploration activities in the area of interest 

have not yet reached a stage which permits 

a reasonable assessment of the existence or 

otherwise of recoverable mineral resources, 

and active and significant operations in 

relation to the area are continuing. 

Expenses failing to meet at least one of the 

aforementioned conditions are written off 

as incurred. 

Depreciation 

rate 

Furniture & Fittings DV 20% 

Office equipment DV 40% 

Motor vehicles DV 20% 

Costs associated with the commercial 

development of resources are deferred to 

future periods, provided they are, beyond any 

reasonable doubt, expected to be recoverable. 

These costs are to be amortised from the 

commencement of commercial production of the 

product to which they relate on a straight line 

basis over the period of the expected benefit. 

Costs associated with the development of 

resources expensed as incurred if recoverability 

is unlikely or unable to be determined. 

(e) Restoration and 

Rehabilitation Provisions 

Both for close down and restoration and for 

environmental clean up costs, provision is 

made in the accounting period when the related 

disturbance occurs. 

(f) Loans and Borrowings 

Loans are carried at their principal amounts, 

which represent the present value of future cash 

flows associated with servicing the debt. Interest 

is accrued over the period it becomes due and is 

recorded as part of other creditors or capitalised 

into the loan account with the consent of the 

lender to the extent it is not paid. Interest on 

convertible note funding is capitalised to the 

extent it is not paid. 

2. Actual and Proposed Transactions 

to Arrive at Pro Forma Consolidated 

Statement of Financial Position 

The actual and proposed transactions adjusting 

the 30 June 2005 audited Statement of Financial 

Position of Linc in the pro forma Consolidated 

Statement of Financial Position of Linc are 

as follows: 

(a) The pro forma statement has been prepared 

to reflect the estimated net cash position of 

the Company based on an assumption that 

$22,000,000 is raised as a minimum under 

the Prospectus; 

(b) The expensing of capital raising costs 

against equity raised pursuant to the 

Prospectus estimated to be in the range 

of $1,500,000 (based on a minimum 

subscription of $22,000,000); and 

(c) As at February 28, 2006 the company has on 

issue convertible notes totalling $7,719,921. 

The company will repay from the proceeds of

the Prospectus $1,600,000 and issue the requisite number of shares at a value of 3 cents per share to repay the remaining balance of the 

notes issued to Newtron Pty Ltd. As at 31 December 2005 the balance of the convertible notes was $7,407,861 and therefore on a pro forma 

basis 193,595,366 shares will be issued as consideration. 

3. Cash assets 

NOTES: 

The movements in cash at bank are as follows: 

# The actual number of shares to be issued 

to Newtron Pty Ltd will be 203,997,383 

which equates to the value of the convertible 

notes outstanding as at 28 February 2006 of 

$7,719,921 after excluding the $1,600,000 of 

notes that will be repaid from the proceeds of 

the Prospectus. The balance of the notes at 31 

December 2005 was $7,407,861. 

6. Contingent Liabilities 

and Commitments 


SIX MONTHS ENDED 


$000s 

Based on discussions with the Directors and 

legal advisors, to our knowledge, the Company 

has no other material commitment or contingent 

liabilities not otherwise disclosed elsewhere in 

the Prospectus. Investors should read the Legal 

Report and the Independent Geologist’s report for 

further possible contingencies and commitments 

PRO FORMA 

SIX MONTHS 


$000s 

Balance as at 31 December 2005 21 21 

Shares issued pursuant to the Prospectus (a) - 22,000 

Capital raising costs (b) - (1,500) 

Repayment of convertible notes (c) - (1,600) 

4. Interest bearing liabilities 

Convertible notes 

21 18,921 

Balance as at 31 December 2005 7,408 7,408 

Repayment of convertible notes (c) - (1,600) 

Conversion of notes to issued capital (c) - (5,808) 

5. Contributed Equity 

(a) Share capital 


SIX MONTHS ENDED 


$000s 

7,408 - 

PRO FORMA 

SIX MONTHS 


$000s 

29,000,000 shares at 31 December 2006 7,414 7,414 

88,000,000 shares issued pursuant to the Prospectus (a) - 22,000 

Less Share issue costs (b) - (1,500) 

Shares issued to Newtron Pty Limited on conversion of 

convertible notes 

(c) 5,808 

7,414 33,722 

(b) Number of shares on issue Nos. 

Balance at 31 December 2005 29,000,000 

Shares issued pursuant to the Prospectus 88,000,000 

Shares issued on conversion of convertible notes # 193,600,000 

Total number of shares on issue 310,600,000 

7. Exploration commitments 

For details on proposed exploration commitments 

on mineral tenements, refer to the Independent 

Geologist’s report in the Prospectus. 


.30 

5 independent 


geologist’s report 

COALSEARCH CONSULTANTS 

6 March 2006 

The Directors 

Linc Energy Ltd. 

Level 7, 10 Eagle Street 

Brisbane, QLD 4000 

Dear Sirs, 

COAL PROPERTIES HELD BY LINC ENERGY LTD. 

INDEPENDENT GEOLOGIST’S REPORT 

The following Independent Geologist’s Report is intended for inclusion in a Prospectus to be dated on or about 

8 March 2006 via which Linc Energy seeks listing on the Australian Stock Exchange (ASX). The Prospectus deals 

with the proposed issue by the Company of 88,000,000 ordinary shares at an issue price of 0.25 cents per share to 

raise a total amount of $ 22,000,000. 

Within the report, estimates of Coal Resources are primarily constrained by the principles of the JORC Code 

(“The Code”), the application of which is now mandatory under the ASX Listing Rules. 

According to The Code, quantities of coal which may be perceived to be available for “eventual exploitation” in 

tenements held or under application by the company, can only be reported for areas which contain “Coal Resources”. 

These quantities would be classified as Inferred, Indicated or Measured Coal Resources based on the definitions of 

The Code and the “Australian Guidelines for Estimating and Reporting of Inventory Coal, Coal Resources and Coal 

Reserves”. 

In considering the status of Identified Coal and Coal Resources, the tenure status of the tenements and applications 

has not been investigated independently by Coalsearch Consultants and the author has relied on reports by other 

independent experts. 

Similarly, Coalsearch Consultants has not independently confirmed the effect of Native Title Legislation on the various 

tenements and applications. 

The Report has been prepared by Garry Leblang - B.Sc., F. Aus.I.M.M., M.G.S.A -, a consultant geologist with over 

35 years experience in coal exploration and evaluation. He has worked mainly in the Surat and Bowen Basins during 

this time, has been responsible for estimation of coal resources in several properties in these Basins and has published 

papers on the geology of these Basins. Garry Leblang has sufficient experience, which is relevant to the style and type 

of coal deposits under consideration and to the activity which he is undertaking, to qualify as a Competent Person as 

defined in the 2004 edition of the “ Australasian Code for Reporting of Exploration Results, Mineral Resources and 

Ore Reserves”. Garry Leblang and associated entities have no direct or indirect interest in Linc Energy or any of its 

associated entities, or any of the Projects which are the subject of this Report, or any tenements in Queensland. 

Garry Leblang has acted as the Company’s Consultant Geologist since 1999. 

References consulted are listed at the end of the Report. There is no reason to doubt the authenticity or substance of 

the information consulted. Assessment of the reliability of information used based on the constraints of the JORC Code 

has been made where appropriate. 

Garry Leblang and Coalsearch Consultants consent to the inclusion of this report and references to it and extracts 

from it, in the form and context in which they are included, and have not withdrawn this consent prior to lodgement of the 

Prospectus with ASIC. Apart from the above, neither the whole nor any part of the Report, nor any references thereto, 

may be included in, or with, or attached to any document, circular, resolution, letter or statement without prior written 

consent of Garry Leblang or Coalsearch Consultants. 

Yours faithfully, 

GARRY M. LEBLANG 

Principal 

Coalsearch Consultants 

P.O.Box 1161 Tewantin QLD 4565 

Email : garryleblang@coalsearch.com 

ABN 15072077251 

Tel: (07) 5455 6977 Fax: (07) 5455 6977 Mob: 0418 722 263

5. . Introduction and Scope 

of the Report 

Linc Energy aims to exploit suitable coal 

deposits via a process known as Underground 

Coal Gasification (UCG) and utilise the 

resulting gas as the feedstock for other 

energy developments. This report has been 

commissioned to provide details of the resource 

base for the proposed development projects. 

TABLE – Coal Tenement Holdings and Status as at 6 March 2006 

Linc Energy has advised us that it is the holder 

of 12 granted Exploration Permits for Coal 

(EPCs), a Mineral Development License (MDL) 

and an application for a MDL; in Queensland 

- Australia. This portfolio of coal resource areas 

has been acquired by the Company over a period 

of five years. Each of them is at a different stage 

of exploration and therefore, knowledge of the 

resources they may ultimately contain varies. 

The status of each of these properties 

is summarised in Table 1 below. 

Tenure Status Sub-Status Granted Expires Principal Holder 

Linc 

Interest 

Sub-Blocks Basin 

MDL 309 GRAN RENL 25 Nov 99 30 Nov 05 Linc Energy Ltd 00% 54Ha Surat 

EPC 635 GRAN - 24 Dec 98 24 Dec 06 Linc Energy Ltd 00% 32 Surat 

EPC 704 GRAN RENL 7 Sep 0 6 Sep 07 Linc Energy Ltd 00% Surat 

EPC 897 GRAN - 5 Aug 05 4 Aug 10 Linc Energy Ltd 100% 54 Surat 



EPC 938 APPL - - - Linc Energy Ltd 100% 80 Surat 

EPC 902 GRAN - 3 Dec-04 2 Dec 09 Linc Energy Ltd 100% 111 Surat 

EPC 854 GRAN - 30 Aug 04 29 Aug 07 Linc Energy Ltd 100% 166 Galilee 

MDL 361 APPL - - - Linc Energy Ltd 100% 2712Ha Pentland 

EPC 908 GRAN - 9 Feb 05 8 Feb 10 Linc Energy Ltd 100% 300 Biloela 

EPC 909 GRAN - 28 Apr 05 27 Apr 10 Linc Energy Ltd 100% 289 Biloela 

EPC 910 GRAN - 9 Feb 05 8 Feb 10 Linc Energy Ltd 100% 160 Ipswich 

EPC 980 GRAN - 4 Nov 05 3 Nov 10 Linc Energy Ltd 100% 59 Bowen 

EPC 526 GRAN - 27 Apr 93 26 Apr 06 Linc Energy Ltd 99% 25 Pentland 

Note: Bold type indicates priority project area. RENL: renewal application already lodged. 

The Company has advised us that it commenced 

a UCG demonstration trial within MDL 309 

(situated 20km. Southeast of Chinchilla 

– Queensland) in 1999 and has concentrated 

most of its efforts and funding to that enterprise. 

Hence, the main focus has been on gaining 

geological knowledge on the Coal Resources 

within MDL 309, which, according to Linc 

Energy, has become the most investigated 

coal resource within the portfolio. The Coal 

Resources of MDL 309 are contiguous with 

coal occurrences also held within EPC 635, 

which surrounds the MDL on all sides. The 

Company also holds nearby EPC 704, southwest 

of Dalby, where exploration by coal explorers 

and documentation of coal occurrences during 

the 1980s have provided sufficient data to 

indicate that a significant resource of coal can 

be eventually estimated with further exploration. 

The remaining permits are relatively underexplored. 

Table 1 above outlines the areas and 

their tenure status. 

In many of the Company’s tenements and 

application areas, coal occurrences are known 

to occur from unambiguous data. Whilst 

excellent potential exists in most of them, 

more exploration needs to be completed before 

resource estimates meeting JORC requirements 

can be confirmed. This additional work will 

largely require core sampling and testing of coal 

within these areas, to provide knowledge of both 

coal quantity and coal quality, at appropriate 

drillhole spacing. This report provides cost 

estimates for some of this work and discusses 

current exploration data available, which can 

be used to envisage the resource potential of 

the areas. 

Linc Energy has advised that it intends to 

develop its UCG activities on MDL 309 and 

for this reason the focus of this report will 

be MDL 309 and adjacent areas of EPC 635 

and EPC 704. 

Although the geological and potential resource 

attributes of other permits and applications 

for permits held by Linc Energy will only be 

discussed briefly in this report, it can be said 

that the existing portfolio of other tenements 

provides Linc Energy with further potential to 

expand its operations. 


.32 

5 independent 

PENTLAND 

geologist’s report (cont) 

GALILEE 

TOWNSVILLE 

FIGURE . – Location of Linc Energy 


MACKAY 

BILOELA 

CHINCHILLA 

SURAT BASIN 

COAL BEARING 

BASINS 

GLADSTONE 

MORETON IPSWICH 

The coal tenements are located mainly in the 

Surat-Moreton Basin, with tenements also in 

the Ipswich Basin, Biloela Basin and Galilee 

Basin. Figures 1 and 2 above show the location 

of these tenements. 

Linc Energy has advised us that a coal seam 

must meet all of the following criteria in order 

for it to be suitable to be exploited using UCG: 

• depth greater than 100 metres, 

• ash content less than 50%, and 

• minimum workable thickness of 3 metres. 

In this report, we comment on whether various 

potential coal seams contain geological 

properties suitable for UCG. 

We have made these comments by first making 

an assessment of the potential coal seams’ 

geological properties and then determining 

whether those properties meet the UCG criteria 

set out above. We understand that Linc Energy 

has access to particular expertise in relation to 

BRISBANE 

FIGURE 2. – Surat, Basin tenements showing MDL 309 

the UCG process. Accordingly we accept no 

liability in relation to the UCG criteria set out 

above and have assumed their accuracy. 

5.2. Geology of the Host Basins 

5.2. Surat and Moreton Basin 

The Linc Energy tenements of immediate interest 

are situated near the boundary of the Surat Basin 

and Moreton Basin, the extent of which are 

shown in Figure 2 above. 

The Surat and Moreton Basins developed over 

part of the Tasman Geosyncline during the Early 

Triassic, Jurassic, and Cretaceous Periods. 

The Jurassic and Triassic were periods of 

continental deposition dominated by fluviatile 

sedimentation. Two marine incursions occurred 

during the Early Cretaceous. Contemporaneous 

andesitic volcanism was prevalent to the east 

during both the Jurassic and Cretaceous. 

Sediments reflect that activity via a high 

volcanogenic provenance and common 

pyroclastic rocks. The late Cretaceous and 

Early Tertiary were periods of erosion and deep 

weathering. The Oligocene and Miocene were 

marked by phases of intense basic volcanism 

around the eastern margins of the Basin. The 

present erosional remnant of the Basin consists 

of uplifted and tilted but relatively undisturbed 

Jurassic and Cretaceous strata overlying the 

Permo-Triassic sediments of the southern 

Bowen basin and Palaeozoic basement. The 

overall sedimentary development of both Basins 

was contemporaneous and for the most part 

broad stratigraphic units can be correlated, 

however underlying tectonics and sources of 

sediment were different, which has resulted in 

differentiation of the sedimentary sequences. 

In particular, the coal bearing sequences have 

different characteristics. The sedimentary 

sequences of both Basins vary in internal 

geometry and overall sediment provenance.

The boundary between the basins accepted 

by most workers is marked by the position of 

the Kumbarilla Ridge, a basement ridge which 

controlled sedimentation to the east and west 

and is a logical divide between the two Basins. 

However, the sedimentary sequences in each 

Basin are differentiated in overall characteristics 

at significant distances from the dividing ridge 

and the sequences at the position of the Ridge 

are in practical terms similar to those sequences 

to the immediate west, within the Surat Basin. 

For this reason, and because the easternmost 

of Linc Energy’s tenements are located near the 

axis of the Kumbarilla Ridge, discussion in this 

report assumes that the relevant Basin, the Surat 

Basin and its particular stratigraphy applies to 

all of the Linc Energy tenements. This report 

focuses on the Jurassic Period, within which 

occur the coal deposits of interest. 

Description of the Jurassic stratigraphy of 

the area is contained in Table 2 below. 

TABLE 2. – Jurassic Stratigraphy of the Surat Basin 

In the Surat Basin, Jurassic sedimentation 

commenced with deposition of the Precipice 

Sandstone, Evergreen Formation, the Hutton 

Sandstone and Eurombah Formation. The reader 

is referred to descriptions of these units by Exon 

1976. Lower fluvial sedimentation followed with 

deposition of the Walloon sub-group, divided 

into three units, the Taroom Coal Measures, 

Tangalooma Sandstone and Juandah Coal 

Measures (Jones and Patrick 1981, Scott et 

al 2004). The Walloon Sub-group was followed 

by upper fluvial sedimentation of the Springbok 

Sandstone, Westbourne Formation and the 

Gubberamunda Sandstone (See Exon 1976). 

Rocks deposited during the Middle 

Jurassic period contain coal seams of 

interest to explorers. 

The Middle Jurassic Walloon Sub-group 

contains two episodes of coal deposition. 

The Juandah Coal Measures occurs at depths 

between 125-300 metres in the area of interest, 

and crop out to the south of the Warrego 

Highway. The Taroom Coal Measures crop out 

to the north of the Warrego Highway and are 

positioned about 180 metres stratigraphically 

below the Juandah Coal Measures. The Linc 

Energy tenements contain coal deposits within 

the Juandah Coal Measures at depths between 

100 and 300 metres. While the Taroom Coal 

Measures may be considered as a future target 

at greater depths, little exploration data is 

available within the tenement areas at this time. 

The Juandah Coal Measures contains near 

the top of the Formation, a coal horizon which 

has been intensively drilled at a wide number 

of locations near the sub-crop. This seam is 

recognized geologically over a very wide area 

of the Basin, and is commonly referred to as 

the “Macalister Seam”. 

The coal horizon was formed in an environment 

where fluvial channels were relatively stable, 

enabling thick peat deposition with only minor 

interruption by overbank mud deposits and 

minor pyroclastic deposition. The geometry of 

swamp areas was such that the thick areas of 

peat deposition formed “pod shaped” deposits 

between channels, and channel migration and 

relocation restricted peat swamp development 

over large areas. The plan shape of significantly 

thick deposits outlined by drilling is commonly 

of restricted areal extent, rather than the very 

wide extent characterising the seams of the 

Bowen and Sydney Basins. See Figure 3 

over the page. 

5.2. . Geology of the MDL 309, 

EPC 635 and EPC 704 Areas 

The tenement areas contain subcrop of 

the Springbok Sandstone and Westbourne 

Formation, overlain by poorly sorted Cainozoic 

sediments, which probably represent perched 

alluvial sediments deposited on the ancient 

Condamine River flood plain. The Juandah 

Coal Measures crops out to the north of the 

area nearer the Warrego Highway and occurs 

at depths of between 60 to 300m within the 

tenement area. The Juandah Coal Measures 

contains a coal seam horizon (named the 

Macalister Interval) at the top of the unit, which 


.34 

5 independent 

ELEVATION 

IN METRES 

260 

240 

220 

200 

COAL 

SANDSTONE 

SILTSTONE 


VERTICAL EXAGGERATION = 10:1 

FIGURE 3. – Coal deposit Morphology 

ranges in thickness up to 20 metres and is 

made up of individual coal seams, mostly 

with thickness greater than 3 metres. The 

Coal Resources and occurrences in each of 

the tenement areas are contained within the 

Macalister Interval. Figure 2, outlined earlier 

in this report, shows approximate depth 

contours for the top of the Macalister Interval. 

The series of coal seams identified in the area 

has variously been named by the exploration 

companies who conducted coal exploration 

during the seventies and eighties. Marathon 

Petroleum used nomenclature pertaining to the 

Macalister coal project near Dalby, where two 

distinct coal sequences can be correlated using 

close spaced drilling data, namely the Kogan 

Interval and the Macalister Interval, in order of 

increasing age. This nomenclature has been 

adopted by current Coal Bed Methane explorers 

in the Basin, and has become widely accepted. 

Direct correlation of these seams with the 

sequence occurring in the Chinchilla area has 

been enhanced by recent petroleum exploration 

activity, with several deep wells providing 

excellent stratigraphic information over a wide 

area of the Basin. Currently the nomenclature 

used in the Chinchilla project areas defines the 

main coal seams as seams A, B and C in the 

resource area of MDL 309, these three seams 

being correlated with the Macalister Interval and 

the overlying thin seams intersected equating 

with the Kogan Interval. See Table 2. 


788 500 E 

7 111 500 N 

7 111 000 N 

7 110 500 N 

7 110 000 N 

7 109 500 N 

791 500 E 

The coals of the Macalister Interval were 

deposited in a fluvial environment, in swamps 

developed between major river channels, with 

levees separating the swamp areas from the 

main watercourses. Thick coal seam formation 

occurs when the channels are stabilized with 

long periods during which flooding is rare. 

During periods of relatively high water flow, the 

channels and levees tend to migrate and the 

geometry of the swamp, levee and channels 

changes. The resultant geometry of the coal / 

sediment distribution is commonly as shown in 

Figure 3 above. Wedges of sediment commonly 

termed “splits” occur between the coal seams, 

the areal extent of the coal seams indicating the 

margins of the swamp area and the thinning 

wedges of sediment indicating the spread of 

sediments due to floods and breaches of the 

levees. This vertical and horizontal variation 

is typical of coal deposits in the Walloon Coal 

Measures. In the deposits more attractive to 

mining exploitation, the presence of sediment 

wedges is minimal and thick coal seams 

uninterrupted by sediment occur. The Macalister 

Interval represents a period during the 

deposition of the Walloon sequence, which was 

particularly stable, with vertically continuous 

coal formation culminating in present day coal 

seams, typically 10-12 metres thick. 

5.2. .2 Geology of MDL 309 

The Macalister Seam occurs within the entirety 

of the MDL area between depths of 120 to 140 

metres below surface. The seam dips gently to 

the south east in most of the area. The geological 

structure of the area is relatively undisturbed 

except for a significant fault located in the north 

west of the MDL, which has downthrown the 

seam to the north-west, as shown in geological 

sections in Figure 5 adjacent. This fault has a 

narrow zone of effect on the sediment sequence, 

as interpreted from drillholes close to and 

intersecting the fault zone. 

The Macalister Seam within the MDL occurs 

with no significant parting over much of the area 

and splits into two seams towards the south east 

of the area (Figure 5). These two coal splits have 

been designated MA1 and MA2 for purposes of 

determining Coal Resource quantities. A thin 

seam designated seam C occurs consistently a 

few metres below Seam MA2 but for purposes 

of determination of Coal Resources has not been 

considered, although in some parts of the area it 

may be feasible to exploit. Average thicknesses 

of MA1 and MA2 Seams within the MDL are 

6.18 and 3.75 metres respectively. Linc Energy 

has advised that the two seams can be exploited 

simultaneously by the UCG process where the 

parting thickness is less than 2 metres. In this 

case, the combined thickness of the seams can 

be used for Coal Resource determination. 

The area is mantled by unconsolidated Cainozoic 

sediments consisting of sand and clay to a depth 

of around 20 metres. Underlying the superficial 

sediments is a sequence of rocks belonging 

to the Springbok Sandstone Formation, which 

as the name implies is dominated by medium 

grained felspatho-lithic sandstone. The 

sandstone has been altered post deposition and 

has a high proportion of swelling clay minerals, 

which renders the rocks relatively impermeable. 

Between the sandstone sequence and the main 

coal seams, the roof of the coal is generally a 

mudstone or siltstone sequence, which also is 

relatively impermeable. The author is advised 

by Linc Energy that these rock characteristics 

are favourable for UCG exploitation, in that 

low permeability is preferred to contain the 

reactor gases, and that the relatively weak roof 

rocks will result in progressive caving, and 

hence minimized surface disturbance 

following production.

FIGURE 5. – Typical geological Section-MDL 309 

5.2. .3 Coal Resources of MDL 309 

Coal Resources have been estimated in 

accordance with the “Australasian Code for 

Reporting of Exploration Results, Mineral 

Resources and Ore Reserves 2004” - 

“The JORC Code” -, in conjunction with the 

“Australian Guidelines for the Estimating and 

Reporting of Inventory Coal, Coal Resources and 

Coal Reserves March 2003” - “The Guidelines”. 

The relevant documents can be accessed via 

the internet at www.jorc.org. 

The Coal Resources estimated by the author, are 

classified as Indicated Resources and quantities 

are shown in Table 3 below. 

The following notes and definitions are relevant 

and specific to the Coal Resources estimated 

(section numbers refer to “The Guidelines”). 

Coal Resources – “3.6. A Coal Resource 

is that portion of a deposit in such form and 

quantity that there are reasonable prospects for 

eventual extraction” and “the location, quantity, 

quality, geological characteristics and continuity 

of a Coal Resource are known, estimated or 

interpreted from specific geological knowledge. 

(“Inventory Coal” and “Coal Reserve” are 

terms not applicable). 

Coal Resources are subdivided in order of 

increasing geological confidence into Inferred, 

Indicated or Measured categories.” The Coal 

Resources estimated and presented in this report 

comply with the definition of Coal Resources as 

defined in “The Guidelines”, in that conditions 

of section 3.6 are met. 

Indicated Coal Resource - Coal Resources 

classified as Indicated Resources, comply 

with “The Guidelines” in that: 

• Points of Observation used contain sufficient 

data for both coal quantity and coal quality 

estimation. The Points of Observation used 

are drillholes from which core samples of the 

coal seams, for which the resource is being 

estimated, have been retrieved with acceptable 

recovery and laboratory tests applicable 

to the proposed exploitation have been 

performed. Additional drillholes at relatively 

close spacing, which do not have laboratory 

tests available, have been used as Points 

of Observation for coal quantities. These 

drillholes also have had geophysical logs 

collected, which unambiguously allow the 

presence of coal to be determined. 

• Indicated Resources have been determined 

by mapping the area of influence of Points of 

Observation which allow for estimation of coal 

quantity and coal quality, such that the Points 

of Observation are not exceeding 1 kilometre 

apart. Trends in coal thickness and quality 

have been limited in extrapolation at the 

margins of the Resource area to 500 metres. 

TABLE 3 - Indicated Coal Resource estimate MDL 309 

SURFER MODEL 

MA SEAM RESOURCE Volume Relative Tonnes 

(x1000 m3 ) Density Avg. (x1000) 

6,339 1.54 9,762 

MA2 SEAM RESOURCE Volume Relative Tonnes 

(x1000 m3 ) Density Avg (x1000) 

4,272 1.44 6,151 

TOTAL 5,9 3 

MINESCAPE MODEL 

MA SEAM RESOURCE Volume Relative Tonnes 


6,279.2 1.54 9,669 

MA2 SEAM RESOURCE Volume Relative Tonnes 


4,385.5 1.44 6,315 

TOTAL 5,985 

Note: Depletion during Demonstration Phase has not been accounted for in these figures. 


.36 

5 independent 


• The number, distribution and integrity of Points of 

Observation, which are supported by Interpretive 

data, are sufficient to allow a “realistic estimate of 

average coal thickness, areal extent, depth range, 

quality and in situ quantity”. 

• Coal Resources have been computed using 

laboratory results for relative density on an air 

dried basis. No correction for in situ moisture 

has been made as the statistical sample for a 

meaningful estimate of in situ moisture was 

regarded as too small. 

• The north western boundary of the resource area 

has been drawn to exclude a corridor 100m wide 

surrounding the fault in that location. 

• The author is not aware, nor has he confirmed 

or eliminated the effect of any environmental 

constraints which may affect exploitation. 

Indicated Coal Resource quantities were computed 

by modeling the roof and floor of each coal seam 

and computing the in situ volume. The modeling 

system used was Surfer 8.0. Volumes were factored 

by the average relative density on an air-dried 

basis to derive tonnages in situ. Computation was 

also completed using a second modeling system, 

Minescape, with a different grid spacing and 

interpolator, resulting in a total tonnage within 

1 per cent of the first model. This independent 

check implies a high degree of reliability in the 

quantity estimation. 

Part of the resource area has been depleted during 

operation of the UCG demonstration plant. This 

depletion is difficult to model, and quantities have 

been based on Company estimates derived from 

mass balance calculations. That is, the Company 

has estimated a depletion tonnage based on the gas 

produced during the demonstration plant operation 

and factored that quantity back using a conversion 

equation. The Company estimate for depletion of the 

resource amounts to 35,000 tonnes, which if correct 

is a relatively insignificant amount compared to the 

total resource. 

The Points of Observation used consist of three 

drillholes from which core samples of the seams of 

interest have been retrieved and appropriate testing 

has been performed. Locations of all drillholes 

completed within the MDL are shown in Figure 4 

adjacent, which also shows the area over which 

Indicated Resources has been estimated. 


SEAM MA 

FIGURE 4. – Coal Resource Area, MDL 309 SEAM MA2

TABLE 4 - Raw Coal Analysis (Air dried Basis) 

Drillhole Seam 

M2 

T23C 

L16C 

Coal quality results are presented in 

Table 4 above. Coal quality requirements for 

UCG provided by Linc Energy are basic in that 

suitable coal only requires to have in situ ash 

level below 50% as a cutoff. Comparison of 

wireline logs of the seams sampled in the cored 

holes with those from supporting non-cored 

drillholes indicates that the stone content of 

seam intersections in the non-cored drillholes is 

consistent with those in the cored drillholes. It is 

reasonable to assume from this observation, that 

variations in in situ ash will not reach the cutoff 

levels in any part of the resource. 

Typical Ultimate Analysis and Ash properties 

of the coal are as follows: 

Ultimate Analysis (daf) % 

Carbon 74.4 

Hydrogen 6.39 

Nitrogen 1.03 

Sulfur 0.54 

Oxygen 17.6 

Total 99.96% 

5.2. .4 Resource Potential of 

EPC 635 and EPC 704 

EPC 635 and EPC 704 have been explored in the 

past by coal mining companies. A considerable 

amount of widely spaced drilling has been 

completed, mainly by Marathon Petroleum, 

Oilmin Pty Ltd and Mobil Energy Minerals / 

Inherent 

Moisture 

(%) 

Ash 

(%) 

Volatile 

Matter 

(%) 

Fixed 

Carbon 

(%) 

BHP. The work has indicated the presence of 

coal over a large area in both EPCs. The drillhole 

data however is largely in the form of non-cored 

drillholes, with the following attributes: 

• Marathon Data – non-cored or “open 

holes” supported by wireline logs with current 

day technology, minor core sampling and coal 

analysis. Potential error limits on coal depths 

+/- 10cm. Some cored holes within EPC 704 

with coal analysis. 

• Oilmin Data – non-cored or “open holes” 

drilled prior to the advent of modern wireline 

logging, however reasonably accurate depth 

estimates on coal seams. No cored holes. 

Potential error limits on coal depths +/- 0.5m 

• Mobil/BHP data – non-cored or “open 

holes” with wireline logging performed on 

old technology, which albeit not in digital 

form, analog records still detect coal intervals 

unambiguously. Potential error limits on coal 

depths +/- 10cm. Some cored holes with 

coal analysis. 

The “open hole” data can only qualify as 

Points of Observation for coal thickness, and 

because little or no coal quality testing has 

been performed, the data cannot be used for 

estimation of coal quality. Therefore the coal 

occurrence cannot form part of or be classified 

as a JORC compliant resource. 

The data, however, contain sufficient geological 

detail to infer continuity between drillholes of 

the main coal horizons such as the Macalister 

Seam and wireline logs unambiguously 

detect the presence of coal and give accurate 

measurements of the coal seam thickness 

Although estimation of any resource is not 

possible, in view of reporting requirements, it 

is considered appropriate however to describe 

Total 

Sulphur 

(%) 

Specific Energy 

(MJ/kg) 

Relative 

Density 

A Seam Composite 8.06 38.93 28.84 24.17 0.43 16.38 1.60 

B Seam Composite 7.13 24.82 36.69 31.36 0.35 21.77 1.45 





Ash Analysis (adb) % 

SiO2 60.9 

Al2O3 29.3 

Fe2O3 1.95 

CaO 2.71 

MgO 1.03 

Na 2 O 1.3 

K 2 O 1.26 

TiO2 1.31 

Mn3O4 0.01 

SO3 0.74 

P2O5 0.04 

BaO 0.07 

SrO 0.06 

ZnO 0.01 

Total 00.8% 

the exploration results in order to give potential 

investors a view of the potential of the areas for 

the eventual proving of a Coal Resource. 

EPC 635 

Figure 6 over the page shows the Location of 

drillholes completed in EPC 635. This figure 

also shows seam thickness contours for the 

MA1 and MA2 seams, as interpreted from 

wireline logs. 

Figure 6, shows the area surrounding MDL 309, 

with prospective seam thicknesses contoured. 

The thicknesses so depicted represent the 

thickness of the two splits of the Macalister 

Seam, designated MA1 and MA2. To be included 

in the data, it has been assumed that each 

split will be in excess of 3m thickness, which 

constitutes the minimum “workable thickness” 

for UCG exploitation. In some parts of the area 

the two splits will be sufficiently close together 

to conceive that the two seams can be exploited 

as one. The area defined by a minimum total 

seam thickness of 3 metres, is considered 

prospective, and will form the area subject to 

exploration in the short term. The bounds of this 

area have been drawn such that all of the area 

is within 1 kilometre of a known intersection 

of the Macalister Seam, which is regarded 

as reasonable, compared with the distances 

prescribed by “The Guidelines”. 

The area so outlined is approximately 

14 square kilometres. (This area excludes the 

area for which Indicated Resources have been 

estimated within MDL 309). Within this area the 

total thickness of the Macalister Seam splits of 

“workable thickness”, ranges from 3.7 to 12.2 

metres. This area therefore represents a very 

prospective exploration target for Linc Energy. 

An exploration program with cost estimates has 

been designed and is outlined below. 


.38 

5 independent 

SEAM MA 

SEAM MA2 


FIGURE 6. – EPC635 Location of current and proposed exploration drilling 

In addition to this area, intersections of the 

Macalister Interval have been made in the far 

south east of the EPC centred on drillholes 

ML16 and ML3, with recorded thickness of 

5 and 10 metres respectively, at depths of 

approximately 240 metres. These drillholes are 

situated approximately six kilometres south of 

the proposed initial exploration area outlined 

above. It would be reasonable to assume that 

significant coal occurrences would occur in 

the zone between. 

A smaller target is located in the west of the 

EPC, centred on drillholes ML6B, ML30B and 

ML21 with intersections of Macalister Seam 

thickness 4.66 and 4.10 metres respectively. 

The Macalister Interval can be correlated in 

drillhole ML7 to the south, but the occurrence 


is split into a number of smaller seams. A large 

part of this area is subject to a petroleum license 

held by Queensland Gas Company, hosting the 

Argyle CBM gas project. The reader is referred to 

discussion on tenure status in this regard. 

The central part of the EPC is relatively 

unexplored, as most of the historical drilling 

was shallow in nature. One drillhole, ML19 

intersected 3.7 metres of coal in the Macalister 

Seam. Whilst data is very sparse in this area, it 

is noted that the area for further exploration in 

this zone is of the order of 60 square kilometres 

and given the patterns of occurrence of thick 

coal seams in the Macalister Interval in the 

region, it would be reasonable to expect that 

appropriate exploration should outline further 

significant coal occurrences in this zone. 

EPC 704 

Figure 7 adjacent shows the locations of 

drillholes completed within EPC 704. This 

Figure also shows thickness contours for 

the Macalister Interval, and a line indicating 

the upper depth limit of 120m. South west 

of this line the Macalister Seam occurs at a 

depth greater than 120m. A depth of 100m 

is considered a minimum depth for the UCG 

process. It is reasonable to assume that the 

Macalister Seam will occur at greater depths 

than can be determined from the current drillhole 

data towards the south west, possibly up to 

300 metres as indicated by petroleum wells 

sited outside the EPC to the south and west. 

The drillhole data was collected exclusively 

by Marathon Petroleum during the 1970s

FIGURE 7. – EPC 704 Location of current and proposed exploration drilling 

and 1980s, and is of a high quality, with 

good descriptive logging of drill cuttings and 

universally supported by wireline logging. Density 

and gamma logs unambiguously indicate the 

presence of coal. However, only two drillholes 

in the data set (TP032C and TP068C) contain 

core sampled coal in the Macalister Seam and 

these drillholes are isolated such that, whilst 

confident continuity of the coal horizon can 

be established for coal thickness estimation, 

estimation of continuity for coal quality is not 

possible. Therefore no “Points of Observation” 

can be established in terms of the JORC Code, 

and estimation of resources is not possible. 

In reviewing the exploration potential of EPC 704 

the area is highly prospective for a large coal 

resource once subjected to additional drilling 

and coal core sampling and testing. 

Marathon, following its drilling campaign, 

undertook detailed correlation of the coal seams 

intersected using geological and wireline logs. 

The main seam intervals identified were the 

Kogan, Macalister and Wambo seams, in order 

of increasing age. This report will not discuss 

the Kogan and Wambo seams, as they are 

ubiquitously of either poor quality or too thin to 

be of interest for UCG exploitation. The Macalister 

Seam has been divided into sub seams named 

MA1 to MA7 in order of ageing. In the main, 

the MA1, MA2 and in a few instances, the MA3 

sub seams occur with suitable thickness either 

separately or combined. These seams occur at the 

top of the coal sequence and have a considerable 

roof zone thickness. The presence of coal in the 

roof zone may confer operational difficulty for the 

UCG process in maintaining the integrity of 

the reactor. 

A minimum combined seam thickness of 

3 meters is required in order for a coal seam to 

be considered suitable for UCG. On this basis 

we have prepared a map (Figure 7 above) which 

shows all seams with a combined thickness 

greater than 3 metres in the MA1-3 group. 

This combined thickness is made up of seams 

greater than 3 metres thick where the seams are 

separated by a significantly thick stone parting 

and a minimum of 3 metres total coal thickness 

where the seams have no significant parting. 

This Figure also shows all drillholes penetrating 

the Macalister Interval and thickness of coal 

is indicated by coal seam isopachs. The total 

thickness so mapped ranges from 1.0 to 14.0 

metres, with 75% of the thicknesses greater 

than 3 metres, and 60% greater than 5 metres. 

The area indicated in Figure 7 encloses a group 

of drillholes which are less than 2 kilometres 

apart. That is extrapolation from any single 

drillhole of trends in seam thickness does not 

exceed 1 kilometre. The area of this polygon 

is approximately 28 square kilometres, every 

drillhole intersected the Macalister Seam at 

thickness greater than 3 metres and the average 

thickness (assuming each drillhole has equal 

weighting) is 7.5 metres. 

Given the very good wireline log data available 

for these drillholes and the well established 

correlation of coal seams via wireline logs, it 

would be reasonable to expect that appropriate 

exploration should outline a significant coal 

resource in this block. 

Given the patterns of occurrence of thick coal 

seams in the Macalister Interval in the region, 

it would be reasonable to state that the area 

is prospective for further significant coal 

occurrences in this zone, by both drilling to 

close drillhole spacing in other thick seam areas 

indicated by exploration results shown in Figure 7 

above, as well as by drilling in virgin areas. 


.40 

5 independent 

These data are within the range of ash, 

moisture and energy content to fit 

requirements for UCG exploitation. 

5.3. Exploration Drilling 


Limited coal quality testing has been performed on core samples from drillhole TP032B and results are shown below: 

COAL QUALITY TESTS – CORED DRILLHOLE TP032B 

Seam Depth From Depth To Thickness Inherent Moisture% adb Ash % adb Specific Energy MJ/kg adb 

MA1 158.12 159.87 1.75 7.5 26.2 21.14 

MA1 159.87 161.15 1.28 8.0 43.9 13.93 

MA1 161.15 163.74 2.59 7.3 30.8 19.19 

Composite 158.12 163.74 5.62 7.5 32.4 18.60 

Linc Energy has asked us to prepare and cost 

drilling programs for EPC 635 and EPC 704. 

The drilling programs have been prepared to 

allow Linc Energy to estimate the potential Coal 

Resources in each of EPC 635 and EPC 704 to 

meet the requirements of the JORC Code. 

5.3. Surat Basin EPC 635 

The exploration program has the objective of 

extending the Indicated Resource within MDL 

309 to the limits of the MDL and beyond into 

the surrounding EPC635 area. The program is 

intended to be conducted without regard to the 

tenement boundaries with the aim of estimating 

one continuous Coal Resource. 

The requirements for an Indicated Resource 

as it applies to the drilling are as follows: 

• Minimum spacing of cored and tested coal 

intersections – 1 kilometre 

• Advised spacing of non-cored drillholes 

for increased confidence in coal seam 

continuity – 500 metres. 

• Wireline logging to be conducted in 

all drillholes. 

The program will be conducted in stages, 

whereby non-cored drillholes will be completed 

on a 500 metre grid. Some existing drillholes 

will be duplicated to provide data from modern 

technology and to provide core samples to 

meet contemporary testing standards. From the 

non-cored drilling, a preliminary geological 

model will be constructed to map the area and 

define the thickness limits of the Macalister 

Seam. This work will be followed by a series of 

holes designed to core sample the seams on an 

approximate 1 kilometre grid to provide samples 

for coal testing. The core sampled interval will 


contain the coal seams of interest and also 

the roof and floor zones, which will provide 

important geotechnical data. The cored hole grid 

will be limited to the mapped area of suitable 

seam thickness. These drillholes will qualify as 

Points of Observation for a JORC Compliant 

resource estimate. 

The drilling will also provide data for mapping 

the geological structure of the area, which will be 

important for subsequent development planning. 

The program will involve an estimated 

20 non-cored drillholes and 11 cored 

drillholes. Cost estimates are as follows: 

Activity Estimated Cost 

Drilling $139,000 

Wireline Logging $15,000 

Geological Field work & 

Reporting 

$47,000 

Data Processing & 

Modelling 

$34,000 

Coal Testing 

Survey Access, 

$18,000 

Environmental, 

Cultural Heritage tasks 

$17,000 

TOTAL $270,000 

5.3.2 Exploration Drilling EPC 704 

The exploration program has the objective of 

defining an Indicated Resource within EPC 704 

centred on an area of thick coal intersections 

in the central part of the EPC (Figure 7). Other 

areas with thick coal intersections exist within 

the EPC which will be considered for future 

exploration. The area of immediate focus 

contains consistent thick Macalister Seam 

intersections at depths between 120 and 200m. 

The data required to be collected to estimate an 

Indicated Resource as it applies to the drilling 

program are as follows: 

• Minimum spacing of cored and tested 

coal intersections – 1 kilometre 

• Advised spacing of non-cored drillholes 

for increased confidence in coal seam 

continuity – 1000 metres. 

• Wireline logging to be conducted in 

all drillholes. 

The program will be conducted in stages, 

whereby non-cored drillholes will be completed 

firstly on a 1000 metre grid. Some existing 

drillholes will be duplicated to provide data from 

modern technology and to provide core samples 

to meet contemporary testing standards. From 

the non-cored drilling, a preliminary geological 

model will be constructed to map the area and 

define the thickness limits of the Macalister 

Seam. This work will be followed by a series of 

holes designed to core sample the seams on an 

approximate 1 kilometre grid to provide samples 

for coal testing. The core sampled interval will 

contain the coal seams of interest and also 

the roof and floor zones, which will provide 

important geotechnical data. The cored hole 

grid will be limited to the mapped area of 

suitable seam thickness. These drillholes 

will qualify as Points of Observation for a 

JORC compliant resource estimate. 

The drilling will also provide data for mapping 

the geological structure of the area, which will be 

important for subsequent development planning. 

The program will involve an estimated 14 noncored 

drillholes and 20 cored drillholes. Cost 

estimates are as follows: 

Activity Estimated Cost 

Drilling $190,000 

Wireline Logging $22,000 

Geological Field work & 

Reporting 

$57,000 

Data Processing & 

Modelling 

$34,000 

Coal Testing 

Survey Access, 

$29,000 

Environmental, Cultural 

Heritage tasks 

$17,000 

TOTAL $349,000

5.4. Other Coal Tenements Held by the Company 

5.4. Surat Basin 

Besides EPCs 635 and 704 and MDL 309, the Company holds one additional application for an EPC in the general region and four granted EPCs near to the 

former areas. These tenements comprise: 

Tenure Status Sub-Status Granted Expires Principal Holder 

The locations of these areas are shown in 

Figure 2, outlined earlier in this report. The 

locations and coverage of these areas are of 

strategic importance to the Company, as it has 

a long term view for the exploitation of potential 

coal resources which may be explored in the 

total block. It also shows approximate depth 

contours (100m and 300m) for the top of the 

Juandah Coal Measures (Macalister Seam). 

The Taroom Coal Measures is known broadly 

to occur with subcrop north of the Warrego 

Highway and at depth in EPCs 898 and 899, but 

information required to plot approximate depth 

contours is less reliable. The Company has 

advised us that it aims to explore this very large 

area in the short to medium term in order to 

select the most prospective ground. 

Data available includes drillhole data from 

early coal exploration work and more recent 

exploration for Coal Bed Methane, the coal 

drilling consisting mostly of shallow drillholes 

but some deeper holes and drillholes completed 

by CBM explorers, which reached depths in 

excess of 250 metres. 

It can be clearly seen that Linc Energy has 

priority of exploration title over a very large 

area, a good proportion of which is highly 

likely to contain prospective coal deposits 

with geological properties suitable for long 

term UCG exploitation. 

Linc 

Interest 

Sub-Blocks Basin 

EPC897 GRAN - 5 Aug 05 4 Aug 10 Linc Energy Ltd 100% 54 Surat 



EPC938 APPL - - - Linc Energy Ltd 100% 80 Surat 

EPC902 GRAN - 3 Dec 04 2 Dec 09 Linc Energy Ltd 100% 111 Surat 

FIGURE 8. – EPC9 0 Beaudesert 

– Location and previous exploration 


.42 

5 independent 


5.4.2 Ipswich Basin 

The Company holds a granted EPC 910 in 

an elongate area situated west of Beaudesert 

Queensland. The area is largely covered by a 

veneer of Middle to Early Jurassic Marburg 

Formation, which is the basal unit of the 

Jurassic sequence in this area. This unit is 

underlain by the Late Triassic Woogaroo 

subgroup, which in turn is underlain by the 

Ipswich Coal Measures, the target Formation 

in this area. A number of data from petroleum 

exploration wells indicate occurrence of 

significantly thick coal seams in this area. 

All of the wells penetrated the Ipswich Coal 

Measures to basement volcanics: 

Queensland American “The Overflow 

No 1” (1962) recorded coal in mud logs from 

approximately 398 – 411 metres and from 

457 – 463 metres. These depths were interpreted 

from mud gas detection logs and electric logs 

which were not as sophisticated as present 

day technology. The logs however indicate 

the unambiguous presence of coal, present in 

the Ipswich Coal Measures and probably of a 

banded nature. 

Tamrookam Creek No 1 (1982), reported coal 

at depths 576-579, 585-588, 612-618 and 

633-639 metres. Inspection of geophysical 

logs indicates that the section from 576 to 

579 metres may contain coal with geological 

properties suitable for UCG exploitation. 

South Moreton #1 well intersected Ipswich 

Coal Measures to basement but recorded 

only very minor amounts of coal. 

Rathdowney #1 and #2 recorded approximately 

6 metres of coal at 626 metres. The interval 

was cored for gas desorption testing and coal 

analyses suggest that the coal is of relatively 

high ash, exceeding 50%. Well logs including 

Sonic and Gamma ray support the presence 

of coal. 

Locations of these wells are shown in Figure 8. 

The close proximity of the three wells located in 

the south of the area with relatively consistent 

results and the relatively remote location of 

the southern part of the area indicates that the 

northern parts of the area should receive priority 

in exploration effort. The area is strategically 

located close to the major energy demand centre 

of Brisbane and the South East. 


5.4.3 Biloela Basin 

The Company holds two granted EPCs 908 

and 909 in the Tertiary Biloela Basin. The target 

formation in this application area is the Biloela 

Formation, of Tertiary age. See Figure 9 below. 

The geology of the Formation is not well known, 

but described as containing “Fluviatile or 

lacustrine silty and sandy mudstone, oil shale, 

minor clayey and pebbly quartz sandstone, coal 

seams, lateritised and silicified.” Thickness of 

the Formation is up to 350m. A considerable 

amount of oil-shale exploration has been 

completed in this area, having similarities 

with the Tertiary Casuarina, Nagoorin, Narrows 

Graben (Rundle) and Duaringa Basins, in 

which significant oil-shale deposits have been 

discovered. However, although oil shale 

is present in the sedimentary sequence, 

no potentially commercial deposits have 

been mapped. 

No coal deposits as such are known in this 

basin. Investigation of coal intersections in 

oil shale exploration drillholes is yet to be 

thoroughly investigated. Two petroleum wells 

were drilled near Jambin in the early 1960s 

did not record significant coal intersections, 

although these holes were drilled in a shallow 

part of the Basin. One drillhole completed by 

the Geological Survey of Queensland in 1980, 

GSQ Monto 5, intersected coal at 168.9m 

(9.5m thick) and at 213.8m (5.7m thick). 

A graphic geological log of GSQ Monto 5 

is shown in Figure 10 adjacent. 

FIGURE 9. – EPC908 and EPC909 Biloela Basin location of previous exploration

FIGURE 0. – Composite log of GSQ Monto 5 

Two samples from the upper seam were analysed 

and the results are tabulated below. 

SAMPLE 

INTERVAL 

Proximate 

Analysis adb 

Inherent 

Moisture % 

73.07– 73.77 75.04– 75.78 

23.5 26.5 

Ash % 14.2 7.8 

Volatile Matter% 32.1 34.0 

Fixed Carbon % 30.2 31.7 

Sulphur % 1.22 1.42 

Phosphorus % 0.009 0.005 

Specific 

Energy MJ/kg 

16.5 17.51 

Relative Density 1.42 1.37 

Moisture Holding 

Capacity 

24.0 26.5 

The analysis indicates that the coal is lignite 

grade, a low rank of coal with a high moisture 

content. However, such coal, as advised by Linc 

Energy, is quite suitable for the UCG process. 

A significant exploration program would be 

required to evaluate the project with associated 

high risk/reward ratio. Any coal deposits 

which may occur in the area are likely to 

have geotechnical disadvantages with poorly 

consolidated overlying sediments, compared to 

the more consolidated rocks of the older Basins. 

The area is strategically located near power 

generation facilities, gas pipeline and close 

to the Gladstone industrial complex. It is 

recommended that study of all the available 

information be undertaken on this area to 

assess the exploration risk. 

5.4.4 Galilee Basin 

Linc Energy holds EPC 854 over an area of 

166 sub-blocks in the eastern part of the Galilee 

Basin (Fig. 11). The area is located in Central 

Queensland, approximately 300km south of 

Townsville and 280km west of Mackay. 

The Galilee Basin is still immature in an 

exploration sense with 50 stratigraphic and 

petroleum wells, 69 Department of Minerals 

and Energy exploration bores and over 1200 

shallow coal exploration bores along the 

western margin in the northern half of the basin. 

Borehole information in the EPC area is 

provided by the Department of Minerals and 

Energy drilling carried out between 1971 and 

1978, which consists of 34 boreholes with 

most coring some part of the Late Permian coal 

sequence. Down-hole geophysical logs are 

generally not available for these boreholes but 

detailed lithological logs, brightness profiles 

and coal quality data have been published by 

the Department. The geological sequence of 

interest is the Bandanna Formation, which is 

the correlative in the Bowen Basin with the coal 

bearing formations at Blackwater, Moura and 

Newlands coal mines. 

The EPC area contains three identified 

prospective coal bearing areas, Moray Downs, 

Laglan and Degulla. The Moray Downs area 

provides the best geological information 

available in the EPC, with a total of 19 boreholes 

drilled in two phases. This area also contains 

the bulk of the coal occurrences in the EPC area, 

with the Degulla and Laglan prospect areas 

containing significant but isolated and smaller 

identified coal occurrence. The Moray Downs 

area has drilling data suitable for estimation of 

Inferred Coal Resources. This report considers 

only the Moray Downs area. 

5.4.4. Regional Stratigraphy and 

Basin Structure 

The Galilee Basin is an intracratonic basin that 

covers approximately 247,000km2 in central 

Queensland. The maximum stratigraphic 

thickness is 2800m and ranges from Late 

Carboniferous to Middle Triassic in age. 

The basin fill accumulated in alluvial plain 

environments and contains thick, widespread 

coal seams of Permian age. Permo -Triassic 

rocks are only exposed along the eastern margin 

of the basin with the remainder covered by fill 

of the Jurassic-Cretaceous Eromanga Basin. 

Coal seams are present in three Late Permian 

units of the Galilee Basin: the Colinlea 

Sandstone and overlying Bandanna Formation 

occur in the southern and North West parts 

of the basin; and the lateral equivalent of these 

two units, the Betts Creek Beds occurs in the 

centre and west of the northern half of the basin. 

Individual seams are up to 20m thick with an 

aggregate maximum thickness of 45m developed 

in the western part of the Koburra Trough. 

The Late Permian coal seams are designated 

A to G in order of increasing age with most 

seams comprising dominantly dull, clean coal. 

Seam C is generally highly banded. 

5.4.4.2 Geology of the Moray 

Downs Area 

The entire area is mantled by a sequence of 

sediments of Tertiary age. A maximum thickness 

of 45m is recorded for the Tertiary, comprising 

red and yellow, clayey mudstone and soft 

sandstone. This formation overlies the Permo- 

Triassic sequence unconformably. 


.44 

5 independent 


The Triassic sequence in this area consists of the 

Dunda Beds and underlying Rewan Formation 

with approximately 150m of Triassic sediments 

penetrated in GA 16. The Dunda Beds consist 

of yellow to red-brown, medium-grained, quartz 

sandstones with minor mudstone interbeds. The 

Rewan Formation comprises interbedded greygreen, 

fine to medium-grained, lithic sandstone 

and grey-green mudstone. 

The Late Permian sequence in the Moray Downs 

area is approximately 150m thick and dominated 

by sandstones with coal seams and minor 

mudstone beds. The sandstones are generally 

light grey, fine-grained, lithic, micaceous and 

weakly cemented with carbonaceous partings. 

Coarse-grained, porous quartz sandstones 

occur below seam D and above seam F. 

Mudstone beds are generally thin and commonly 

carbonaceous, ranging in colour from dark grey 

through grey to fawn and brown. Fawn coloured 

mudstones are typically associated with coal 

seams, particularly seam C. 

The oldest sediments penetrated were Early 

Permian and comprised fine-grained, grey to 

dark green, volcano-lithic sandstone with minor 

tuffaceous siltstones and pebble conglomerates. 

Coal seams make up 31% of the Late Permian 

sequence and occur in three groups: A-B seams, 

C and D seams, E and F seams. The A-B seams 

form the most prospective potential resource. 

A-B Seam 

A total geological thickness of 21m is attained 

in borehole GA16. The seam can be divided into 

three sections: 

. an upper half that consists of dull coal with 

numerous thin bight bands that increase in 

abundance towards the base of this section. 

A fawn mudstone 0.3m thick occurs 

approximately 1.5m from the top of 

this section. 

2. a middle section comprising roughly a 

quarter of the seam thickness that consists 

of predominantly dull coal with a 0.6m thick 

fawn mudstone in the middle of this section. 

3. a lower quarter comprising interbedded grey 

and fawn mudstone with poor, shaly coal. 


In borehole GA16 the upper 2m appears to 

have been eroded by an overlying sandstone 

and the lower section splits away, separated by 

17m sandstone. 

Other Seams 

The seam C averages 15m geological thickness 

and occurs 28m below the A-B seam. Seam C 

consists of interbedded fawn and carbonaceous 

coals with minor poor quality, shaly coal. 

Seam D is separated from seam C by 

approximately 5m of mudstone and averages 

5.5m of coal. An upper section of approximately 

3m of dull coal has bight and mid-lustrous 

bands in the lower part. A lower section of about 

2.5m is mainly dull to mid-lustrous with beds of 

grey mudstone, in part sideritic. 

The seam E is approximately 2.9m thick and 

consists of predominantly dull coal that occurs 

35m below the D seam. Three mudstone beds 

occur in the upper half and bright coal bands 

are present in the lower half. 

Seam F has an average geological thickness of 

6.8m and occurs 7.5m below E seam. The upper 

2.2m consists of interbedded mudstone and dull 

coal. The lower 4.6m comprises dull, high ash 

coal and common mudstone bands. 

Drillholes which qualify as Points of Observation 

have not in all cases core sampled seams below 

the A-B interval. For this reason estimation of 

Coal Resources is restricted to the A-B coal 

interval. 

5.4.4.3 Coal Resources Moray 

Central Area 

Quantification of Coal Resources within EPC 854 

is limited to a relatively small part of the very 

large potential resources occurring in the area. 

This is largely due to the nature of the drillhole 

array, which in most part is oriented along strike, 

with a set of single drillholes. This array does 

not allow for estimation of the dip of the Coal 

Measures and therefore the extent of the coal 

seams between the location of the intersection 

and the position of the subcrop at the base of 

tertiary sediments. Only one part of the drilling 

array provides this information, that located in 

the Moray Central area, where a drillhole section 

perpendicular to the dip has been completed. 

This section of 6 drillholes intersected the 

A-B coal interval at four points as well as 

points outside the sub-crop, which allow for 

interpretation of the limit of coal occurrence at 

the subcrop. Three of these drillholes collected 

and tested core samples of the A-B coal 

interval and these intersections qualify as 

Points of Observation. Intervals within these 

intersections meeting criteria outlined below 

have been selected as “working sections” 

for both coal thickness and coal quality: 

. minimum thickness of working 

section greater than 3.0m. 

2. ash content is less than 40%. 

3. stone partings within a “working section’ 

do not exceed 0.30m in thickness. 

4. depth range between 100 and 500m. 

The resources estimated are classified 

as Inferred Resources, as defined by the 

JORC Code, with Points of Observation 

less than 4km apart. The average spacing 

of the Points of Observation is about 

1.5 kilometres, which precludes estimation 

of Indicated Resources (1.0km required). 

The resource estimate has been computed 

on the following basis: 

• Selected working sections for each drillhole 

intersection, based on the above criteria to 

determine seam thickness. 

• Relative density factor derived from average of 

all analysed plies within the working sections. 

• Area determined by area of influence of Points 

of Observation with maximum distance from 

each Point of Observation of 2 kilometres. 

• The area of the resource estimation is also 

limited by the interpreted sub-crop line of 

the A-B seam interval. 

The area covered by the resource estimate 

is shown in Figure 11.

FIGURE . – EPC854 Galilee Basin, location of exploration drilling and coal resource 

TABLE 5 - INFERRED RESOURCE ESTIMATE EPC 854 

RESOURCE AREA 

AREA 

(SQkm) 

Table 5 above shows Coal Resources for 

the AB seams of the Bandanna Formation 

calculated using the criteria and methodology 

outlined above. 

Coal Quality 

Coal from the Moray Downs area is classified 

as sub-bituminous A according to the ASTM 

classification. The coal is non-coking and 

has low sulphur values. 

Coal petrological analyses on seams from 

GA21 are summarized below and reveal low 

vitrinite contents: 

Vitrinite 35.0% 

Liptinite 3.5% 

Semi-inertinite 32.5% 

Inertinite 3.5% 

Mineral Matter 25.5% 

Total 100% 

THICKNESS 

AVERAGE (m) 

R.D. 

FIELD 

TONNES 

(Million) 

MORAY CENTRAL 17.9 11.46 1.60 326 

For detailed drill logs and coal quality data, 

the reader is referred to the Departmental 

records referenced below. 

A large amount of coal analysis data is available 

in DME Records 1974/8 and 1987/28. The full 

range indicative coal quality is only available 

for laboratory float sink tests at 1.90 RD. As the 

coal will not be washed prior to utilisation in the 

UCG process, it is inappropriate to quote on this 

basis. Raw coal analyses include only ash, which 

for the AB seams in the resource area averages 

24.1%. In general, it can be stated that the coals 

are of low rank, non-coking, high volatile and 

moderately high in inherent moisture. 

The coals are classified as high volatile 

bituminous A under the ASTM classification with 

a low sulphur content and the crucible swelling 

number from 0 to 1/2. The average specific 

energy is 23 MJ/kg. A typical proximate analysis 

on an air dried basis is given over the page: 

Moisture 9.1% 

Ash 15.3% 

Volatile Matter 29.4% 

Fixed Carbon 46.2% 

Total 100% 

Given the apparent good geological continuity of 

the coal seams, it would be likely that additional 

exploration drilling would allow a substantial 

proportion of the coal occurrence beyond the 

Moray Downs Resource area. The Moray Downs 

area at large contains an array of drillholes along 

a strike length of some 35km. A priority for 

exploration is additional Points of Observation 

up dip and down dip to provide 2 dimensions to 

the drilling array. Once this is in place the area 

is prospective for a very large resource. 

5.4.5 MDL 36 – Pentland 

Linc Energy has advised that it has a pending 

Application for MDL 361 near Pentland in 

Central Northern Queensland and that the 

underlying title to this application is EPC 526. 

Linc Energy expects MDL361 to be granted 

via an agreement with Xstrata Coal as the holder 

of EPC 526. The reader is referred to the 

Solicitor’s Report at Section 9 in this Prospectus. 

The principal previous explorer of the area was 

the Shell Coal Development Company, who 

completed a series of drilling and evaluation 

programs during the period 1979 – 1982. In this 

work program, the deposit of coal evaluated was 

named the Elimeek Deposit. Shell completed 81 

open holes and 11 cored holes in the Elimeek 

Deposit. The area was subsequently surrendered 

by Shell, who held the view that the area could 

not be exploited by open cut mining methods in 

the foreseeable future due to the depth of coal 

and the relatively low quality, which was suited 

at the time to a domestic power generation use 

only. Linc Energy advises that its interest in the 

area has been prompted by the attributes 

of depth, which Shell found unacceptable. 

The area is located in the northern subcrop area 

of the Galilee Basin, which is mantled by Triassic 

and Cainozoic sediments, at least 50m thick. 

Permian coal bearing strata occur below the 

Triassic cover. The Betts Creek Beds is the 

coal bearing Formation, which is overlain by 

the Triassic Warang sandstone. 


.46 

5 independent 


The Coal Measures are divided into: 

Betts Creek Upper ( BCU) Barren strata overlain by Triassic Warang sandstone 

Pentland Upper (PU) Coal bearing interval containing PU seam series, PU2,PU4,PU6,PU8 

Pentland Interburden zone (PI) Barren zone 

Pentland Lower (PL) Coal bearing interval containing PL seam series, PL2,PL4,PL6,PL8 

Betts Creek Lower Barren zone 

Boonderoo Beds 

For purposes of evaluation of resources for 

UCG exploitation the PU seams are generally 

either deficient in thickness and / or quality 

and generally occur at depths too shallow for 

exploitation. Therefore, they have not been 

considered in the resource estimates. 

For purposes of estimation of Inferred Resources 

the area covered by Points of Observation at 

4000 metres spacing extends beyond the location 

of existing drillholes either cored or non-cored. 

Accordingly, the area used for estimation of 

FIGURE 2. – MDL36 Pentland location of coal resaource, PL2 and PL4 Seams 


Underlying Formation 

Inferred Resources has been restricted to a 

distance no further than 500 metres from the 

last point of intersection, which in most cases 

is 500m distant from the outermost open hole. 

Within the PL seam series, the thickness and 

quality of the PL2 and PL4 seams meet the 

criteria for UCG exploitation. However, the 

PL6 and PL8 seams do not generally meet 

these criteria. 

The areas so defined containing the resources 

are shown in Figure 12 below. 

Although some coal resources may exist in 

the seams other than PL2 and PL4, only these 

seams have been considered in Coal Resource 

estimates. 

Figure 12 below also shows the areas which 

contain Coal Resources for both the PL2 and 

PL4 seams respectively. The maps also show 

the thickness of each seam and the areas of both 

Indicated and Inferred Resource estimates.

The Coal Resources estimated include both Indicated and Inferred categories based on the requirements of the JORC Code. Resource quantities were 

computed by modeling the roof and floor of each coal seam and computing the in situ volume within the areas constrained by the factors listed above. The 

modeling system used was Surfer 8.0. Volumes were factored by the average relative density on an air-dried basis to derive tonnages in situ. 

Coal Resources estimated are shown in Table 6 below. 

TABLE 6 - ELLIMEEK DEPOSIT – ESTIMATED COAL RESOURCES 

SEAM 

INDICATED RESOURCES INFERRED RESOURCES 

VOLUME RD TONNES 

VOLUME RD TONNES 

SEAM 

(Mill CM) Avg (Mill) (Mill CM) Avg (Mill) 

PL2 40.65 1.58 64.54 PL2 20.6 1.58 32.54 

PL4 53.01 1.61 85.35 PL4 28.4 1.61 45.72 

TOTAL INDICATED 6 .4 TOTAL INFERRED 78.3 

The parting separating the PL2 and PL4 

seams ranges from 2 to 4 metres in thickness 

throughout the resource areas. 

Ash levels for all Points of Observation used in 

the resource estimates are less than 50% and 

most data are less than 30%. An overall coal 

quality specification for the Coal Resources has 

not been estimated, as Linc Energy advises that 

ash alone is the only important constraint for 

suitability for UCG exploitation. Shell geological 

reports quote a specification for the PL seams 

as follows: 

(Raw Coal As Received basis) 

Inherent Moisture 12.94% 

Ash 28.9% 

Volatile Matter 20.9% 

Fixed carbon 37% 

Total Sulphur 0.26% 

Total 100% 

Specific Energy MJ/kg 17.4 

5.5. Conclusions 

Linc Energy Limited holds several coal 

tenements in Queensland under Exploration 

Permits for Coal and a Mineral Development 

License. At the same time it has priority of 

application for a further EPC and MDL. These 

properties represent a range of maturity in 

relation to Coal Resource establishment, but 

together cover a strategic area which has 

potential for the Company to exploit large coal 

tonnages beyond the foreseeable future. 

The Company has established an in situ 

Indicated Coal Resource within MDL 309, where 

Linc Energy set up its UCG demonstration plant, 

estimated by the author at 16 million tonnes 

of raw coal. Additionally, it is likely that future 

appropriate exploration within the MDL area 

and in the immediate surrounding area within 

EPC 635 will result in the establishment of an 

expanded coal resource adjacent to the known 

resource estimated within this report. 

The geological disposition of the coal resources 

of MDL 309 meet the criteria set out by Linc 

Energy as being necessary for a coal resource 

to be exploited using UCG. 

Within the Surat Basin, the Company’s holdings 

of EPCs and a application for an EPC combine 

to form significant potential coal occurrences. 

These EPCs are prospective for very large 

deposits of coal, which await appropriate 

exploration work in order to be realised as 

Coal Resources. 

The Company’s holding of EPC 854 situated 

in the Galilee Basin, contains an Inferred 

Coal Resource estimated by the author to be 

326 million tonnes of raw coal in situ. Additional 

appropriate exploration is likely to result in this 

resource expanding and increasing in level of 

confidence. 

The Company’s holding of MDL 361 

(applications) situated in the northern Galilee 

Basin near Pentland, contains a Coal Resources 

estimated by the author to be 161 million tonnes 

of indicated raw coal in situ, plus 78 million 

tonnes of inferred raw coal in situ. 

Linc Energy also holds EPCs in the Ipswich and 

Biloela Basins, which whilst more speculative 

in terms of coal potential, may hold some value 

in that they are situated close to major energy 

demand centres. 

Garry M. Leblang 

B Sc, F AusIMM, M GSA 


.48 

5 independent 

REFERENCES 

NB – “CR No” Refers to publicly available reports in 

the Confidential Reports system of reports held 

by Queensland Dept of Mines. 

SURAT – MORETON BASIN 

General Literature 

EPC CR TITLE AUTHOR 

39 2333 PROGRESS REPORT A-P 39C, QLD, FOR SIX MONTHS TO 31.01.68 BENBOW D D 

39 2600 REPORT ON A-P 39C MADDEN T J 

102 4201 REPORT ON AREAS RELINQUISHED 8.05.72, A-P 102C, “CHINCHILLA” DIMMICK T D 

102 4540 REPORT ON THE PARTS OF A-P 102C TO BE RELINQUISHED AS AT 8.05.73 

102 5024 REPORT ON AREA RELINQUISHED AS FROM 8.05.74 LASSAM D P SVENSON D 

102 5025 A-P 102C, CHINCHILLA, EXPLORATION PROGRESS REPORT FOR 6 MONTH PERIOD ENDED 7.11.74 RAGMENT P A SVENSON D 

103 3923 DALBY D P LASSOM SIX-MONTHLY REPORT 29/11/1971 

103 4203 A-P FOR COAL 103C, “DALBY I”, FINAL REPORT DIMMICK T D 

148 4992 INITIAL 6 MONTHLY REPORT OF OPERATIONS ON A-P 148C “WARRA” FOR THE PERIOD 3.03.74-2.09.74 

148 5183 A-P 148C, REPORT FOR PERIOD 2.09.74-1.03.75, “WARRA” HAITES T B WERNER G J 

148 5454 A-P 148C, WARRA, SE OF CHINCHILLA, (A) COMPILATION OF DATA 2.03.74-2.09. (B) DRILLING LOGS 

148 5897 FINAL REPORT A-P 148C WARRA SOUTHEAST QUEENSLAND LARKIN C J 

150 5427 WANDOAN. REPORT ON AREA RELINQUISHED 22.3.75 BY M. S. SHACKLETON, (THIESS BROS. P/L) 

150 5791 A-P 150C CONDAMINE REPORT ON AREA RELINQUISHED 22ND MARCH, 1976 IRVINE J C SVENSON D 

150 13641 A-P 150C, CONDAMINE, REPORT ON AREA RELINQUISHED, 30.06.84, (MRH 6/10) HORSLEY M R 

153 5010 A-P 153C - KOGAN EXPLORATION PROGRESS REPORT FOR SIX MONTH PERIOD ENDED 22.09.74 SVENSON D LEBLANG G M 

153 5207 A-P 153C, KOGAN, EXPLORATION PROGRESS REPORT FOR 6 MONTH PERIOD ENDED 22.03.75 

153 5460 


A-P 153C, KOGAN, SE OF CHINCHILLA, EXPLORATION PROGRESS REPORT FOR 6 MONTH PERIOD 

ENDED 22.09.75. 

IRVINE J 

153 5595 A-P 153C KOGAN, EXPLORATION PROGRESS REPORT FOR 6 MONTH PERIOD ENDED 22.3.76 IRVINE J C SVENSON D 

153 5792 A-P 153C KOGAN, REPORT ON AREA RELINQUISHED 22ND MARCH, 1976 IRVINE J C SVENSON D 

155 5055 A-P 155C, HOPELANDS, SIX MONTHLY REPORT FOR THE PERIOD ENDING 15/12/74 HODGKINSON J D 

155 5213 A-P 155C, HOPELANDS, 6 MONTHLY REPORT ENDING JUNE 1975 

155 5841 FINAL REPORT ON A-P 155C HOPELANDS MADDEN T J 

210 6397 A-P 210C, SIX MONTHLY REPORT FOR PERIOD ENDED 22.8.77-22.2.78 FORREST R J 

210 6521 


EXON, N F ,1976 “Geology of the Surat Basin 

in Queensland” BMR Bull 166, 1976. 

JONES G.D., & PATRICK R.B.,1981 “ Stratigraphy 

and Exploration Geology of the North-eastern Surat 

Basin “ Journal of the Coal Geology Group of the 

Geological Society of Australia – Surat Moreton Basin 

Symposium Vol 1 part 4. 

LEBLANG, G M., 1985 “Report on Area Relinquished 

AP428C Chinchilla – 3rd June 1985” CR 15193 DME 

Open File exploration Report. 

A-P 210C (A) REPORT ON MAY 1978 DRILLING PROGRAMME CHINCHILLA QLD, AND FINAL REPORT (B) 

SUMMARY OF EXPLORATION 

LEBLANG,G.M., RAYMENT, P.A., and SMYTH, M. 

1981 “The Austinvale Coal Deposit – A Palaeo 

environmental Analysis” Coal Geology Vol 1 Part. 

MATHESON,S.G. (1991). “Geology and Coal 

resources of the Moreton Basin, Queensland,” 

SWARBRICK, C.F.J. (1973) “ Stratigraphy and 

Economic Potential of the Injune Creek Group in 

the Surat Basin” GSQ Rep 79. 

FORREST R J

234 6889 SIX MONTHLY REPORT, A-P 234C JOHNSON G J 

234 7123 REPORT ON AREA RELINQUISHED, JUNE 1979, A-P 234C CECIL PLAINS JOHNSON G J 

234 7339 12 MONTHLY REPORT, A-P 234C, CECIL PLAINS JOHNSON G J 

234 8535 REPORT ON 1980 DRILLING, A-P 234C, CECIL PLAINS, MILLMERRAN AREA, QLD TWEEDALE G W 

234 9457 A-P 234C, CECIL PLAINS, FINAL REPORT 

247 7988 A-P 247C, Braemar Forest, Report on area relinquished for period 3/1/79 to 12/10/79 Perkins, N T 

248 7305 HALF YEARLY REPORT A-P 248C, NANDI, PERIOD 3.1.79-2.7.79 CASEY L M 

248 7720 SIX MONTHLY PROGRESS REPORT FOR THE PERIOD 3.7.79-2.1.80, A-P 248C, NANDI MCLEAN - HODGSON J 

248 7982 REPORT ON AREA RELINQUISHED A-P 248C (NANDI) FOR PERIOD 3.1.79-12.10.79 HALL D H 

255 8006 A-P 255C CHINCHILLA, REPORT ON AREA RELINQUISHED FOR THE PERIOD 13.3.1979-12.2.1980 BROWN - KENYON D 

255 10700 A-P 255C CHINCHILLA - REPORT ON AREA RELINQUISHED FROM 13.3.82. HALL D H 

255 12202 A-P 255C, CHINCHILLA, REPORT ON AREA RELINQUISHED FROM 12.03.83, (REPORT NO. 1983-37) HALL D H 

262 7376 TIPTON, S OF CHINCHILLA 1979 DRILLING PROGRAMME 

262 9753 A-P 262C, TIPTON, REPORT ON EXPLORATION FOR 6 MONTH PERIOD ENDED 4.6.1981 DAWSON A R BENNETT C R 

262 11142 A-P 262C, TIPTON, REPORT ON AREA RELINQUISHED 5.06.82 LEBLANG G M 

269 7984 CECIL PLAINS, A-P 269C, SIX MONTHLY REPORT FOR PERIOD 10.10.79-10.4.80 

269 8603 FINAL REPORT OF EXPLORATION FOR PERIOD APRIL 1980 TO OCTOBER 1980, A-P 269C, CECIL PLAINS BARTO C L 

270 8373 RELINQUISHMENT REPORT, A-P 270C, CHINCHILLA BARTO C L 

270 11063 CHINCHILLA, A-P 270C, REPORT ON AREA RELINQUISHED ON 10.10.82 GRAYSON M 

270 12822 A-P 270C, CHINCHILLA, REPORT ON AREA RELINQUISHED 23.06.83 KEREN E 

280 8075 A-P 280C TIPTON, SIX MONTHLY PROGRESS REPORT FOR PERIOD 2.1.1980- 1.7.1980 CASEY L M 

280 8552 A-P 280C, TIPTON, SIX MONTHLY PROGRESS REPORT FOR PERIOD 2.7.80-1.1.81 BROWN-KENYON D 

280 10085 A-P 280C (TIPTON), SIX MONTHLY PROGRESS REPORT FOR PERIOD 2.7.81 - 1.1.82 HALL D H 

280 10122 SURAT BASIN, CORE PICTURE BOOK (HUTTON SS, WALLOON COAL MEASURES, SPRINGBOK SS) CLARK W J COOPER D M 

280 11070 A-P 280C, TIPTON, REPORT ON AREA RELINQUISHED FROM 2.01.82. HALL D H 

280 11729 A-P 280C, TIPTON, SIX MONTHLY PROGRESS REPORT FOR PERIOD 2.07.82- 1.01.83 HALL D H 

280 11823 GEOLOGICAL EVALUATION OF A-P 280C, TIPTON 

CARR S D DUNN D L J HALL 

D H 

280 12045 A-P 280C, TIPTON, REPORT ON AREA RELINQUISHED FROM 2.01.83 HALL D H 

280 12256 A-P 280C, (TIPTON), PROGRESS REPORT FOR PERIOD 2.01.83-21.06.83 HALL D H 

321 10170 A-P 321C, DALBY AREA, EXPLORATION REPORT, STAGE 1 (81626020) 

321 10171 A-P 321C, DALBY AREA, RELINQUISHMENT REPORT 17.09.81, (91014) 

328 8887 A-P 328C MILES, FIRST SIX MONTHLY PROGRESS REPORT FOR PERIOD 2.10.1980- 1.4.1981 HALL D H 

328 9545 A-P 328C, MILES, SECOND SIX MONTHLY PROGRESS REPORT 2.4.1981-1.10.1981 HALL D H 

328 10746 A-P 328C MILES, REPORT ON AREA RELINQUISHED FOR THE PERIOD 2.10.80- 1.10.81 HALL D H 

328 10747 A-P 328C (MILES) - SIX MONTHLY PROGRESS REPORT FOR PERIOD 2.10.1981- 1.4.1982 HALL D H 

328 11148 A-P 328C, MILES, REPORT ON AREA RELINQUISHED FROM 30.04.82 HALL D H 

346 9161 A-P 346C, FIRST HALF YEARLY GEOLOGICAL REPORT FOR PERIOD ENDED 1.9.1981 KHOO F 


.50 

5 

independent geologist’s report (cont) 

references (cont) 

280 11823 GEOLOGICAL EVALUATION OF A-P 280C, TIPTON 


CARR S D DUNN D L J HALL 

D H 

280 12045 A-P 280C, TIPTON, REPORT ON AREA RELINQUISHED FROM 2.01.83 HALL D H 

280 12256 A-P 280C, (TIPTON), PROGRESS REPORT FOR PERIOD 2.01.83-21.06.83 HALL D H 

321 10170 A-P 321C, DALBY AREA, EXPLORATION REPORT, STAGE 1 (81626020) 

321 10171 A-P 321C, DALBY AREA, RELINQUISHMENT REPORT 17.09.81, (91014) 

328 8887 A-P 328C MILES, FIRST SIX MONTHLY PROGRESS REPORT FOR PERIOD 2.10.1980- 1.4.1981 HALL D H 

328 9545 A-P 328C, MILES, SECOND SIX MONTHLY PROGRESS REPORT 2.4.1981-1.10.1981 HALL D H 

328 10746 A-P 328C MILES, REPORT ON AREA RELINQUISHED FOR THE PERIOD 2.10.80- 1.10.81 HALL D H 

328 10747 A-P 328C (MILES) - SIX MONTHLY PROGRESS REPORT FOR PERIOD 2.10.1981- 1.4.1982 HALL D H 

328 11148 A-P 328C, MILES, REPORT ON AREA RELINQUISHED FROM 30.04.82 HALL D H 

346 9161 A-P 346C, FIRST HALF YEARLY GEOLOGICAL REPORT FOR PERIOD ENDED 1.9.1981 KHOO F 

353 9162 A-P 353C, FIRST HALF YEARLY GEOLOGICAL REPORT KHOO F 

356 10355 A-P 356C, FIRST SIX MONTHLY REPORT AND FINAL REPORT Q82-5 STUART N F 

383 11987 A-P 383C, DALBY, REPORT ON AREA RELINQUISHED FROM 23.12.82, REPORT NO. 1983-28 HALL D H 

384 10796 SIX MONTHLY REPORT FOR PERIOD ENDED 8.08.82, A-P 384C, QLD, (MMC 1) WALLIN C I 

384 11525 SIX MONTHLY REPORT FOR PERIOD ENDED 8.2.83 AND FINAL REPORT A-P 384C, QLD MMC 2 WALLIN C I 

401 15955 A-P 401C, SE OF CHINCHILLA, FINAL REPORT ON RELINQUISHED SUB-BLOCKS 

411 13463 A-P 411C, CHINCHILLA, REPORT ON AREA RELINQUISHED FROM 25.05.84 HALL D H 

411 14708 A-P 411C CHINCHILLA REPORT ON AREA RELINQUISHED FROM 25.5.85, REPORT NO. 1985-06 BROWN - KENYON D 

411 15796 A-P 411C, CHINCHILLA, REPORT ON AREA RELINQUISHED FROM 25.05.86 AND FINAL REPORT BROWN-KENYON D 

413 13044 A-P 413C, (DALBY), REPORT ON AREA RELINQUISHED FROM 21.06.84, (1984/29) BRAIN T J 

413 14923 A-P 413C, (DALBY), REPORT ON AREA RELINQUISHED FROM 20.06.85, REPORT NO. 1985/15 BROWN-KENYON D 

413 15797 A-P 413C (DALBY), REPORT ON AREA RELINQUISHED FROM 20.06.86 AND FINAL REPORT BROWN - KENYON D 

428 15193 REPORT ON AREA RELINQUISHED, A-P 428C, CHINCHILLA, 3.06.85 LEBLANG G 

428 16641 A-P 428C, CHINCHILLA EAST, REPORT ON AREAS RELINQUISHED ON 29.04.87 HANDKE R A 

431 19226 SURAT COAL JOINT VENTURE, A-P 431C, REPORT ON AREA RELINQUISHED 15.04.88 COXHEAD B A 

450 24844 EPC 450, Surat, Report on area relinquished 19/5/92 Carr, A F 

464 28120 EPC 464, KOGAN CREEK, REPORT ON AREA RELINQUISHED AUGUST 1996 RAYMENT, P A 

465 31629 EPC 465, Wilkie Creek & Horse Creek, Partial relinquishment report of 42 s/b dropped 15/1/95 BURNETT, A D 

517 29756 EPC 517, KOGAN CREEK, RELINQUISHMENT REPORT AUGUST 1996 RAYMENT, P A 

EPC

IPSWICH BASIN 

CR 510 – EPP71 Final Report Qld American 

No 1 . C W Siller 1 Jan 1960 

CR 10984 – EPP266 POE Tamrookum Creek 

#1 Well Completion report . Bridge Oil 

1 Oct 1982 

CR28959 – AP570P C.A.P. South Moreton 

#1 Well Completion Report. Renison 

Petroleum Consultants 26 Aug 1996 

CR 24000 – S.S.E. Rathdowney #1 &2 Drilling 

Summary, Gas Content and Resource Estimates 

– Final Results. B Camp 11Dec 1992 

BILOELA BASIN 

Noon, T.A. “ Stratigraphic Drilling Report – GSQ 

Monto 5” Qld Govt Mining Jnl October 1982 

CR848 – AP78P Nortex Australian Oils Ltd , Nortex 

Jambin No1 7 No 2 wells. Nortex Aust Oils 1 Jan 1962 

GALILEE BASIN 

Geological Survey of Queensland Records 

Carr, A.F. 1973. Galilee Basin exploratory coal drilling 

- Degulla area. GSQ Record 1973/19. 

Company Report No. Title Author 

379 Geological reconnaissance of the 1900SQ M coal prospecting area south of the Great Northern Railway near Pentland REID J H 

7297 SIX MONTHLY PROGRESS REPORT 4.7.79, A-P 249C PENTLAND 

7684 A-P 249C, PENTLAND, 6 MONTH PROGRESS REPORT BARCLAY C J 

8077 A-P 249C, SIX MONTH PROGRESS REPORT FOR PERIOD ENDING 4.7.80 BARCLAY C J 

8352 A-P 289C, FLINDERS, REPORT FOR 6 MONTHS ENDED 23.10.80 

8683 A-P 249C, SIX MONTH PROGRESS REPORT FOR PERIOD ENDING 4.1.81 BARCLAY C J 

9129 A-P 249C, RELINQUISHMENT REPORT RELINQUISHED 4.1.1981 BARCLAY C J 

9513 A-P 289C, FLINDERS, PROGRESS REPORT FOR 6 MONTHS ENDED 23.4.1981 

Carr, A.F. 1974. Galilee Basin exploratory 

coal drilling - Laglan area. GSQ Record 

1974/12 

Carr, A.F. 1974. Galilee Basin exploratory 

coal drilling - Moray Downs area. GSQ 

Record 1974/28 

Matheson, S.G. 1987. Coal Exploration in the Galilee 

Basin, Moray Downs north and south 1976 - 1978. 

GSQ Record 1987/28. 

PENTLAND 

Company reports 

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10408 A-P 249C, RELINQUISHMENT REPORT FOR 60 SUB-BLOCKS 4.1.1982, CEPR 17/82 CODD J W 

10781 “A GEOLOGICAL EVALUATION OF A-P 249C PENTLAND’, (CEPR 19/82) CODD J W 

11791 A-P 249C, PENTLAND, SIX MONTHLY PROGRESS REPORT FOR PERIOD ENDING 4.01.83 RADESTOCK M P 

11876 A-P 289C, “FLINDERS”, FINAL REPORT (1181) BECK A C 

12258 A-P 249C, PENTLAND, SIX MONTHLY PROGRESS REPORT FOR PERIOD ENDING 4.07.83, (CEPR 21-83) PATTERSON C L 

12781 A-P 249C, SIX MONTHLY PROGRESS REPORT FOR PERIOD ENDING 4.01.84, (CEPR 6-84) PATTERSON C L 

12782 A GEOLOGICAL EVALUATION OF THE ELLIMEEK DEPOSIT, A-P 249C, (CEPR 3-84) BOX F 

13022 A-P 249C, PENTLAND, QLD, REPORT ON 25 SUB-BLOCKS RELINQUISHED 4.01.84 (CEPR 9/84) MURPHY P 

13306 A-P 249C, PENTLAND, SIX MONTHLY PROGRESS REPORT FOR PERIOD ENDING 4.07.84, (CEPR 17/84) MURPHY P 

14150 A-P 249C, PENTLAND, REPORT ON 25 SUB-BLOCKS RELINQUISHED 4.01.85, (CEPR 1/85) MURPHY P 

14603 GEOLOGICAL EVALUATION OF THE LAUDERDALE DEPOSIT, A-P 249C, PENTLAND, (CEPR 3-85) BOS F 

16241 A-P 249C, PENTLAND, QLD, MILRAY DEPOSIT, REPORT ON 47 SUB-BLOCKS RELINQUISHED 27/10/86 FORD R M D 


.52 

6 independent 


engineer’s report

6. . Executive Summary 

The concept of a commercial Underground 

Coal Gasification (UCG) facility coupled with 

a 30 to 40MW power plant or a Gas to Liquids 

(GTL) facility appears to be technically feasible. 

The syngas composition from the UCG trials at 

Chinchilla lies within the operating experience 

of similar facilities worldwide. The associated 

technologies for syngas cleanup, power 

generation and Gas to Liquids are all established 

and have been in operation with above ground 

gasifiers for many years. 

The technology used by Linc Energy for the UCG 

operation at Chinchilla is commercially sensitive 

and therefore has not been reviewed in detail 

in this report. This assessment, with respect to 

UCG, is limited to publicly available information 

and Shedden Uhde’s experience in above ground 

gasification. It is therefore reviewed in 

concept only. 

The strength of the Linc Energy proposal lies 

in their ability to draw upon their own UCG 

experience and the expertise of Ergo Exergy, and 

in particular, Dr Michael Blinderman from the 

former Soviet Union where Linc Energy advises 

that the largest and most significant commercial 

sized operations have been carried out to date. 

There appears to be no significant barrier to the 

application of these two technologies to UCG. 

It is recommended that operating experience 

from a demonstration scale facility is used to 

evaluate optimum process conditions for a 

future commercial scale GTL facility. 

The following technical issues, crucial to 

the project, are to be investigated: 

• Ground water contamination 

• Subsidence 

• Syngas quality and consistency 

• Firing of low calorific value (LCV) 

gas in turbines 

• Adjusting of the carbon monoxide to 

hydrogen ratio of the syngas for GTL 

The risk of groundwater contamination is 

the most significant risk facing UCG. The 

mechanisms for contamination appear to be 

well understood, allowing steps to be taken to 

reduce this risk. Appropriate site selection and 

ground water monitoring have been a part of 

Linc Energy’s environmental management at 

Chinchilla. These elements will be essential for 

future UCG operations. 

Large-scale UCG operations have been in 

operation in the former USSR (and Russia) 

for some time, but have not yet been proven 

commercially in the Western World. 

6.2. Introduction 

In Underground Coal Gasification (UCG), coal 

is converted to a synthetic, combustible gas 

that is transported to the surface and combusted 

to produce heat and power, separated 

to recover hydrogen or converted to liquid 

hydrocarbons (GTL). 

The idea of UCG has been around for more than 

100 years being a logical extension of the well 

established above ground gasification process. 

Field experiments began as early as 1912 in 

the UK, however the bulk of the experience over 

the last 100 years is in the former Soviet Union 

where a number of commercial sized operations 

were developed. Significant research has also 

been carried out in, but not limited to, the United 

States, Spain, China, Australia and New Zealand. 

The history and status of the UCG project 

as advised to us by Linc is set out below. In 

December of 1999, Linc Energy began trials 

at Chinchilla, Queensland to demonstrate the 

technical and commercial feasibility of the 

UCG process. Technology and experience for 

the operation was drawn from the former Soviet 

Union via Dr. M. Blinderman of Ergo Exergy 

Technologies Inc. who has a total of over 

15 years of operation and research experience 

in the former Soviet Union. Over a 30-month 

period, approximately 32,000 tonnes of coal was 

gasified making it the largest and longest trial in 

the Western World. All syngas from the trial was 

flared to the atmosphere. 

The scope of this report is to review the technical 

feasibility of coupling a UCG facility with a 

30 to 40MW Gas Turbine Generator (GTG) 

and a Gas to Liquids (GTL) unit using Fischer 

Tropsch technology. These options have been 

selected by Linc Energy to enable them to 

extract value from stranded coal resources 

while utilising their experience and know 

how in UCG technology. 

In order to assess the feasibility, the analysis will 

be broken down into the following four sections: 

• UCG to produce raw syngas, 

• Clean up of the raw syngas to produce a clean 

syngas for a 30 to 40MW GTG or GTL facility, 

• 30 to 40MW GTG with clean syngas as fuel, 

• GTL facility using clean syngas as feedstock. 

The sections have been divided in this way 

because each is essentially independent from 

the other, with the common element either being 

raw or clean syngas, either as a feedstock or as 

a product. 

In each case, the history and recent 

developments of the technology will be 

reviewed to identify historical precedents that 

may give some indication of the likely success 

in the future. Secondly, the technology itself is 

reviewed to identify barriers to its successful 

application in the proposed configuration. The 

environmental impact of each section will also 

be discussed to determine if there might be 

any regulatory barriers to the application of 

the technology as proposed. Finally, possible 

construction schedules will be assessed to give 

an approximate indication of the likely timing for 

a future project. 


.54 

6 independent 

6.3. Underground Coal Gasification 

6.3. Description 

Gasification is the process where oxygen and 

steam are reacted with carbonaceous materials 

to form a synthetic gas, commonly known as 

syngas. Typical carbonaceous materials include 

coal, coke, natural gas and heavy hydrocarbons. 

The oxygen may be in the form of air, or high 

purity. The major components of syngas are 

carbon monoxide, hydrogen, carbon dioxide, 

methane and water and may be either combusted 

to produce heat and power, separated to recover 

hydrogen or converted to synthetic chemicals 

such as liquid hydrocarbons. 

There are hundreds of commercial gasification 

units in operation (Green 2005) with 

approximately one third in operation on 

coal in surface, purpose built reactors. The 

processes in surface reactors can be replicated 

underground by drilling into hydrocarbon 

reserves and injecting air or oxygen into the 

coal seam. This process is known as 

Underground Coal Gasification (UCG). 

The benefits of UCG include: 

engineer’s report (cont) 

• lower capital cost compared to an 

equivalent above ground facility, 

• reduced mining and recovery cost, 

• ability to utilise previously 

unrecoverable reserves, 

• reduced environmental impact from 

mining operations and above ground 

gasification facilities, 

• safer operation by placing high pressure 

and temperature operations underground, 

• lower fugitive dust / noise and visual impact, 

• lower risk of surface water contamination. 

Linc Energy reports that air blown underground 

coal gasification began at Chinchilla on 

26 December 1999 where 32,000 tonnes of coal 

were gasified 1 over a period of 30 months (until 

mid 2002) to produce approximately 80 million 

Nm 3 of syngas. The depth to the roof of the coal 

seam was about 130m. In 2002 the gasifier was 

shutdown in a controlled fashion in order to 


demonstrate that the gasification process can 

be quenched without significant damage to the 

environment. From the middle of 2002 until 

the present, the Chinchilla site has been in a 

controlled shutdown state with on-going ground 

water monitoring. 

Linc Energy claims that over the 30 months of 

operation, a high availability of gas production 

was achieved with stable quality and flow 

making the operation at Chinchilla the 

largest and longest in the Western World. 

6.3.2 History / Recent Developments 

Russian chemist D.I. Mendelev is credited with 

the idea of UCG in 1888, however West German 

literature credits W. Siemens of the U.K. (1868). 

The most significant development experience 

was gained in the former Soviet Union, 

beginning in the late 1920s, interrupted only 

by the Second World War. Substantial research 

programs having also been carried out in, but 

not limited to, US, Spain, China, Australia and 

New Zealand. 

Russia, and the former USSR, has developed 

considerable experience in coal seams, with 

facilities in operation for up to 46 years and 

reaching a maximum depth of 430m. Scales 

of operation have been developed up to 

300 MWe equivalent with the gas generally 

being distributed for industrial use. In total, 

approximately 15 million tonnes of coal has 

been gasified underground, compared to just 

50,000 tonnes gasified experimentally in the 

United States (Creedy and Garner, 2001). 

Two commercial plants have been operating 

in the former Soviet Union after the above 

data was reported. 

A number of tests have been conducted in the 

United States over the last 30 years, all at depths 

of less than 300m. The UCG trials, together 

with environmental monitoring and laboratory 

research work, demonstrated that shallow 

UCG was both technically and environmentally 

feasible. Key developments to result from work 

in the United States included: 

• concepts for cavity growth modelling, 

• development and demonstration of the 

controlled retraction of ignition point 

(CRIP) technique, 

• the use of guided drilling techniques 

to establish the gasification channel, 

• post gasification underground 

environmental impact data, 

• highlighting the importance of 

hydro-geological characterisation. 

Two short UCG trials were carried out in 

1997 at El Tremedal, Spain, at a depth of 

approximately 600m where approximately 

300 tonnes of coal were gasified. The trials 

were interrupted following an explosion during 

an ignition of the coal. The trials, though short, 

were generally considered a success and proved 

that at this depth, UCG can be operated 

with stability and flexibility. 

Chinese experience with UCG extends mostly 

to coal seams accessed through underground 

mining methods, usually from existing 

mines. The primary aim has been to recover 

remnant coal from exhausted mines prior to 

being abandoned. 

In Australia, in addition to the UCG trials at 

Chinchilla, the Commonwealth Scientific and 

Industrial Research Organisation (CSIRO) 

have prepared mathematical models of gasifier 

behaviour. These models will enable the study 

of UCG control and optimisation, field layout 

and the behaviour of structures, walls and 

rubble under various conditions. 

6.3.3 Technology 

General 

In UCG, steam and air or oxygen are injected 

into a coal seam via a surface well. The gases 

react with the coal to form a synthetic gas, 

commonly known as syngas. The syngas is 

forced through cavities in the coal seam towards 

a production well where the gas is extracted and 

cleaned for use in downstream processes.

The link between the injection and 

production well can be established via 

any one, or a combination of directional 

drilling, hydrofracturing, electrolinking, or 

reverse combustion. 

As the coal is consumed, a cavity is formed and 

eventually the roof collapses. As the gasification 

progresses, the cavity grows laterally towards 

the production well. This cavity growth is 

allowed to continue until the product gas drops 

sufficiently in quality to be no longer useful 

to the downstream processes. When the coal 

in the cavity is exhausted, new production 

and injection wells are drilled to exploit a 

new section of the coal seam. The greater 

the lateral growth of the gasifier, the longer 

the gasifier life and therefore the more cost 

effective the operation will be. This is because 

of the significant cost of drilling injection and 

production wells. 

The major components of syngas are carbon 

dioxide, carbon monoxide, hydrogen and 

methane and water vapour. In addition to these 

gases, the following components may also be 

present in varying amounts; hydrogen cyanide, 

ammonia, formate, organic acids, mercaptans, 

thiophenes, hydrogen sulphide, carbonyl 

sulphide, other carbonyls and sulphides and 

some hydrocarbons that result from pyrolysis. 

These components are formed during surface 

gasification of coal and appropriate safety and 

design procedures have been developed to 

manage them. 

Iron and nickel carbonyls may be present in 

the syngas (as vapour) in small quantities 

(ppm) where iron and nickel are present in an 

atmosphere of carbon monoxide. Iron and nickel 

carbonyl decompose at 180-200°C and therefore 

tend to deposit on surfaces at high temperatures. 

For this reason they can cause a problem for gas 

turbines where the nickel and iron will deposit 

on the turbine blades degrading the performance 

of the turbine. Carbonyls tend to be most 

problematic in liquid feedstock surface gasifiers 

where the formation of soot is an integral 

part of the process. The soot contains the ash 

components, such as iron and nickel, and 

therefore a large surface area of metal is exposed 

to carbon monoxide; hence the formation of 

significant quantities of the metal carbonyl. 

Metal carbonyls are not likely to be present in 

significant quantities in UCG due to the reduced 

presence of soot and ash at the temperatures 

where carbonyls can form. None the less, it is 

advisable that some testing be carried out to 

prove the presence, or lack thereof, of carbonyls 

in the product syngas. 

The chemical reactions that take place during 

gasification are complex but may to reduced to 

the following: 

C + O ² 

C + CO ² 

< CO ² 

+HEAT exothermic 

+HEAT < 

> 2CO endothermic 

C + H ² O +HEAT < 

> 

C + 2H ² 

CO + H ² 

endothermic 

< 

> CH +HEAT 4 exothermic 

Gasification may also be referred to as 

partial-oxidation and in this regard differs from 

combustion where coal is burned in an excess 

of oxygen. In combustion, the coal is converted 

almost entirely to carbon dioxide and water. 

Gasification, by contrast, takes place in a substoichiometric 

atmosphere of oxygen resulting in 

a high yield of carbon monoxide and hydrogen. 

This reducing atmosphere tends to convert 

sulphur in the coal to hydrogen sulphide or 

carbonyl sulphide, and some of the nitrogen to 

ammonia. Both these components may be easily 

removed using commonly available technology 

and is discussed in the gas clean up section of 

this report. In coal combustion however, sulphur 

is converted to sulphur dioxide and some of the 

nitrogen is converted to oxides that are not as 

easy to remove using conventional technology. 

The reactions in UCG can essentially be broken 

down in to two stages. The first, gasification, 

takes place early in the gasifier (closer to the 

injection well) where the temperature is higher. 

These reactions are described by the overall 

reactions shown above. As the temperature 

drops later in the gasifier (closer to the 

production well) where the temperatures are 

lower, the predominant process is known as 

pyrolysis or thermal decomposition. Under this 

process, heavier longer chain hydrocarbons 

are broken down into lighter hydrocarbons, 

predominantly methane, that leave the coal 

seam with the syngas. 

The performance of the gasifier is generally 

a function of temperature and pressure. At 

higher temperature and pressures, thermal 

equilibrium is reached more rapidly resulting 

in a higher conversion efficiency and therefore 

heat value of the product gas. The thermal 

equilibrium temperature is a function of the 

steam to oxygen ratio. At higher ratios (i.e. 

more steam, less oxygen), thermal equilibrium 

temperature drops resulting in a higher heating 

value because methane formation is favoured 

at lower temperatures. Unfortunately these two 

aspects compete, that is, a lower equilibrium 

temperature that results from a higher steam 

input, gives a higher heating value product gas, 

but conversely, the lower temperature reduces 

the conversion efficiency for a given reactor 

size, decreasing the resulting heating value of 

the product gas. Typically, higher temperatures 

and pressures will result in a syngas with the 

highest heating value. This is because it is not 

possible to construct a gasifier large enough to 

give sufficient reaction time to take advantage 

of lower equilibrium temperatures. Secondly, 

higher temperatures will increase the yield of 

products from pyrolysis, increasing the heating 

value of the product gas. 

Because the reactor is located underground, 

it is not possible to precisely control all the 

parameters of the gasification process such as 

pre-processing of the coal, reactor dimensions 

and the flow path. Therefore there is somewhat 

less control over the final gas quality when 

compared to a surface coal gasifier. None 

the less some influence may be gained by 

varying the steam / oxygen ratio or the oxygen 

concentration (i.e. air blown, or higher purity 

oxygen injection). This controllability will be 

important when conditioning the syngas for 


.56 

6 independent 

down stream units such as gas to liquids (GTL) 

or a gas turbine generator (GTG). Quality could 

also be buffered to some extent by operating a 

number of gasifiers in parallel. That is, a drop in 

gas quality in one gasifier towards the end of its 

useful life can be compensated for by operating 

a number of gasifiers in parallel, and therefore 

reducing the impact of changes in the gas 

quality from any one gasifier. 

The Chinchilla Project 

At Chinchilla, steam for the gasification reaction 

is drawn from water in the coal seam itself and 

the ground water in the surrounding strata. 

Therefore, no additional steam is injected 

into the well. Mechanisms for controlling the 

influx of water into the reactor are discussed 

in some detail in a paper titled “Ground water 

at the Underground Coal Gasification Site at 

Chinchilla, Australia” by M S Blinderman and 

S Fidler (2003). 

Due to the proprietary nature of the technology 

employed by Linc Energy on the Chinchilla 

project, most of the technical aspects relating 

to preparation and operation of the gasifier will 

remain outside the scope of this report. This 

includes selection of the underground site, 

interaction of the gasifier with the surrounding 

strata, establishment and locations of the 

boreholes (wells), methods and techniques 

for linking production and injection wells, 

ignition of the gasifier, cavity behaviour 

and gasifier control. 

Linc have advised that they have signed a MOU 

with Ergo Exergy Technologies Inc (Canada). 

We understand the experience of Ergo Exergy’s 

UCG experts is dealt with elsewhere in this 

Prospectus. The UCG technology developed, 

refined and practised by Ergo Exergy is called 

the Exergy UCG technology or UCG. 

Linc Energy claims to have operated the largest 

and longest UCG demonstration facility in the 

Western World. In total, Linc Energy reports 

that approximately 32,000 tonnes of coal were 

gasified with a high availability of product gas 

for 30 months, from December 1999 through 

to mid 2002. The heating value of the produced 

syngas is stated to lie in the range of 

4.5 - 5.7 MJ/Nm 3 . 



3 

Due to commercial sensitivity, no detailed 

information is available on production gas 

flow rates or gas quality (LHV, composition 

etc) and their variability over time. However, 

from the observation of historical process 

data at the Chinchilla site by Shedden Uhde 

personnel, in July of 2005, no obvious issues 

or concerns were identified. For future, larger 

scale demonstration facilities, it is recommended 

that a detailed gas-monitoring program be 

established. Such a program would establish 

the availability of product gas at high production 

rates over an extended period, against a 

defined set of criteria. The intent would be 

to demonstrate the ability of UCG to reliably 

supply downstream units, such as a Gas to 

Liquids facility, with large quantities of gas 

of consistent quality. 

6.3.4 Environmental Performance 

A detailed report into the environmental aspects 

of UCG has been prepared for Linc Energy by 

Golder Associates (2006). The comments in this 

section represent only a review of the key points 

identified in this and publicly available literature 

into the environmental performance of UCG. It 

is recommended that for more in depth analysis, 

the reader refer to the aforementioned report 

from Golder Associates. 

UCG has a number of advantages over surface 

gasification from an environmental standpoint. 

These include: 

• reduced environmental impact from 

mining operations and above ground 

gasification facilities, 

• lower fugitive dust / noise and visual impact, 

• lower risk of surface water contamination, 

• no ash/slag disposal issues associated 

with above ground gasifiers. 

The most significant issue facing UCG is the 

potential for contamination of ground water 

from the products of pyrolysis and gasification. 

This topic has been discussed in detail in a 

paper for the “Water in Mining Conference” 

at Brisbane - Queensland, 13-15 October 2003. 

(Dr Blinderman and Dr Fidler 2003) 

Dr Blinderman and Dr Fidler state that the 

philosophy for ground water management 

should include the following: 

• Site characterisation for modelling of ground 

water flow in order to design a monitoring 

system that allows control of the interaction 

between groundwater and gasifier. 

• Containment of the reagents and products 

within the gasifier and delivery of gas phase 

contaminants with the product gas for 

surface treatment. 

• Controlled shutdown to remove contaminants 

from the gasifier and therefore minimise 

residual concentrations. 

• If required, cleanup of the abandoned 

gasifier to baseline conditions. 

• Measures that prevent the leaching of 

residual ash and / or containment of 

the leachate within the gasified cavity. 

The primary mechanism for containment of 

contaminants from gasification is to maintain a 

positive pressure gradient from the coal seam 

and surrounding strata to the gasifier during 

normal operation and shutdown. This ensures 

that there is an inflow of water to the gasifier, 

required for the reaction, and contains the 

product gas before exiting the gasifier via the 

production well. Linc Energy reports that they 

have acquired an intimate knowledge of aquifers 

near the gasifier, carefully monitoring the 

associated pressure during UCG operations. 

Another important feature of the ground water 

protection system is the hydraulic circulation 

system, used by Linc Energy. This consists 

of the wells and the connection between them 

through the coal seam. Through this system, 

the underground cavity can be flushed, pumped 

out, cleaned up and / or biological agents can 

be pumped through the system for cleanup 

purposes. These measures are possible because 

the contaminants are contained within the 

gasifier due to the positive hydraulic gradient in 

the direction of the gasifier. If the contaminants 

are allowed to migrate into the porous media 

surrounding the cavity, subsequent cleanup 

becomes extremely difficult, if not, impossible. 

The establishment of an underground hydraulic 

circulation system and the aforementioned clean 

up system would form part of the controlled 

gasifier shutdown process.

The importance of maintaining the positive 

hydraulic gradient, underground circulation 

system and a controlled shutdown was 

demonstrated in the UCG trials in the US in 

the 1970s and 1990s at Hoe Creek and Carbon 

County, respectively. The Hoe Creek and 

Carbon County trials led to contamination of 

the underground aquifers, requiring extensive 

and expensive cleanup activities that continued 

many years after the completion of the trials. 

In both cases, it is understood the pressures 

in the cavity where allowed to rise above the 

hydrostatic pressure of the surrounding aquifers. 

In the case of Hoe Creek, subsidence of the 

overburden during gasification connected the 

gasifier with an overlying aquifer. High cavity 

pressures were used in an effort to control the 

influx of underground water to the gasifier, 

resulting in gas penetration into the coal 

seam and the aquifer. 

At Carbon County, high pressures were 

experienced during the initial attempt at linking 

the production and injection wells. In the trial, 

a forward combustion process was used to 

attempt to link the wells. In forward linking, 

a fire is established at the bottom of one well, 

and air is injected in to the same well, in an 

attempt to expand the fire front and burn enough 

coal to establish a link to the other well. During 

such a process, there is no circulation of the 

oxidant and combustion gases. A high pressure 

must be maintained above the hydrostatic 

pressure in order to encourage ignition and 

flame propagation. 

Blinderman and Fidler (2003) demonstrated 

that the reasons for the failures at Hoe Creek 

and Carbon County are well understood. 

Their plans for mitigating the potential for 

groundwater contamination include: 

• Methods for establishing production and 

injection well links that do not require well 

pressures above that of the surrounding 

hydrostatic pressure. Specific details are 

proprietary, but may include a combination 

of reverse combustion linking (as opposed 

to forward), hydro-fracturing and electro- 

linking. Directional drilling is not considered 

economically feasible for the Chinchilla 

project at this stage. 

• Operation of the gasifier below the hydrostatic 

pressure. Site selection may be important 

here to ensure that the influx of ground 

water can be controlled and does not 

adversely affect the quality of the syngas. 

• Establishment of a detailed controlled 

shutdown program. Details of this program 

have been given in the “Chinchilla 

Underground Coal Gasification, Controlled 

Shutdown Procedure” prepared for the 

Queensland EPA in April 2002 and 

remains confidential. 

• A ground water monitoring programme 

to ensure that the above measures have 

been effective. 

The Golder Associates report indicates that 

they were consulted for the Chinchilla project to 

prepare a set of recommendations with respect 

to the location of monitoring wells and undertake 

the associated monitoring program. Ground 

water quality has therefore been monitored at 

thirteen locations around the Chinchilla site 

since 1999. All but one of the thirteen wells 

show no elevated levels of contaminants 2 above 

background levels. One of the wells has shown 

a decrease in pH immediately after the start 

of gasification, with the same well showing 

elevated levels of benzene. Linc Energy has 

indicated that the well in question, M5, has 

been connected to the cavity in the course of 

operation and represents a periphery of the 

gasifier. The ground water in Chinchilla area is 

not suitable for drinking due to its high salinity 

with the only potential use being stock watering. 

There are no limits for benzene concentrations 

for livestock water. 

Subsidence of the surface is an additional 

impact expected from UCG, however is likely to 

be less than some forms of traditional mining 

technology. The potential surface effects may 

include impacts on surface drainage, habitats, 

land use, damage to above ground structures 

and damage to surface infrastructure. Sub 

surface effects, however, may cause disruption 

of the integrity of the overburden, leading to gas 

leakage into the overburden and potentially into 

aquifers overlying the coal seam or 

the atmosphere. 

The Golder Associates report indicates that 

they recommended that the risk of ground 

water contamination, due to the subsidence of 

the overburden, be mitigated by undertaking 

a detailed geotechnical characterisation of the 

area to be gasified. Areas with unfavourable 

geotechnical conditions should be avoided. 

It has also been advised that for future 

works, monitoring of subsidence and the 

extent of caving be carried out to verify 

theoretical predictions. 

To date, there has been no evidence of 

subsidence of the surface based on monitoring 

from eight surface surveying monuments at 

the Chinchilla site, however, in a larger scale 

commercial operation some subsidence 

is expected. 

6.3.5 Fabrication and Construction 

Once the initial site has been selected, it is 

expected that the development of the associated 

above ground facilities will form the critical path 

of a larger scale UCG project. For approximate 

construction and start-up schedules for gas 

clean up, power plant or gas to liquids facilities, 

please refer to the appropriate sections in 

this report. 

6.3.6 Assessment 

The most significant risk to a successful 

expansion of the UCG project proposed by 

Linc Energy appears to be the potential for 

contamination of the ground water in the 

surrounding aquifers. From a review of the 

literature, there are only two documented cases 

of ground water contamination resulting from 

UCG operations. The best documented of these 

is the Hoe Creek trial. In all cases, contamination 

appeared to result from operation of the 

gasifier above the hydrostatic pressure of the 

surrounding aquifers. 


.58 

6 independent 


Linc Energy report that with an understanding 

of the reasons for groundwater contamination, 

Linc Energy has managed to operate the 

Chinchilla facility for over three years with 

minimal contamination of the surrounding 

groundwater. Elevated levels of benzene were 

detected in one of thirteen monitoring wells, 

which according to Linc Energy, demonstrated 

good connection with the underground cavity 

during UCG operation and formed a part of 

its peripheral hydraulic system. Linc Energy 

has comprehensive plans for the controlled 

shutdown of the underground cavities in order 

to further minimise the potential for ground 

water contamination. 

Surface subsidence is an expected 

environmental impact of UCG operations, but 

with appropriate site selection and review by 

an independent third party, is expected to be 

manageable. The impact on the environment 

is expected to be similar to other mining 

operations. To date no subsidence has been 

recorded at the Chinchilla site. However it is 

expected from future, larger scale operations. 

Above ground facilities, including gas collection 

and injection manifolds must consider potential 

surface subsidence in their design. 

Sub surface subsidence could lead to 

contamination of the ground water through 

the process of caving. Mitigation of this risk 

may be achieved through detailed geotechnical 

studies of the area to be gasified, and 

therefore appropriate site selection. 

Ongoing monitoring is recommended to 

verify theoretical predictions. 

Overall, the environmental impact is expected to 

be less than an equivalent surface facility, due to 

the lack of above ground mining operations and 

gasification facilities. 

The process of UCG appears to be technically 

feasible with no technical barriers being 

identified at this stage. With a high availability 

of product gas over three years, the Chinchilla 

UCG trial is the longest and largest gasification 

trial in the Western world. Based on the 


Chinchilla performance to date, Ergo Exergy 

Technologies Inc claims to be able to estimate 

the gas quality that will be achieved at the time 

when the plant reaches commercial scale. 

It is advised that tests be carried out to 

determine the level of carbonyls in the syngas 

leaving the production wells. Carbonyls, if 

not considered, will tend to foul downstream 

processes and may have the most significant 

impact on a Gas Turbine if installed. 

Following the selection of an appropriate site for 

further UCG trials and a potentially commercial 

operation, the development of above ground 

facilities is expected to form the critical path in 

any future UCG project. 

6.4. Gas Clean Up 


Raw synthesis gas from UCG contains 

primarily H 2 , CO, CO 2 , CH 4 and H 2 O vapour. 

The gas will also contain smaller amounts of 

other components, including impurities that 

need to be removed to certain levels to meet 

specifications for processing in downstream 

gas turbine generator (GTG) or gas to liquids 

units (GTL). 

The following impurities are 

generally encountered: 

• particulate matter (PM) 

(ash, unconverted carbon) 

• acid gas (H S, COS, CO , formic acid) 

2 2 

• nitrogen compounds (HCN, NH ) 3 

• metals (mercury, carbonyls) 

• condensable HC’s & water 

The gas clean up step may also include 

unit operations to adjust the ratios of 

bulk components to meet requirements of 

downstream units, such as for emissions 

or optimised plant performance. 

6.4. . Specification 

Requirements for gas clean up are very different 

for GTG and for GTL. Specifications for GTG 

are set primarily to meet emission regulations, 

and to some extent for protection of the GT. 

Specifications for GTL are set mainly to 

avoid loss of performance of the F-T catalyst. 

Although the purification requirements differ 

significantly, the processes used are the same 

or very similar. This section describes the 

specifications, the various processes and their 

applicability to GTG and GTL configurations. 

UCG Product 

Bulk composition and impurity levels in UCG 

are considered very similar to intermediate 

pressure air blown coal gasification. Based on 

performance of the Chinchilla demonstration 

plant, and international experience with air 

blown UCG and coal gasification, the following 

typical composition has been used in analysing 

gas clean up processes: 

Component vol % 

H 2 

13.2 

CO 4.5 

CO 2 

N 2 

14.5 

36.7 

HCS 6.6 

O 2 

0.2 

H 2 O (vap) 24 

H 2 S 0.1 

NH 3 

0.2 

Presence and concentration of impurities are 

not fully defined at this time. The following 

components are typically found in above ground 

gasification and are assumed to be present to 

some extent in syngas from UCG: 

• Particulate Matter (PM) 

• COS, CS2 • mercury, trace metals 

• metal carbonyls 

• chloride 

• condensable HC’s & H O 2

There may also be trace components introduced 

by groundwater and ash. Alkaline components 

drop out of the vapour phase at temperatures 

observed with UCG, and are therefore not 

expected above ground. Syngas from high 

sulphur coal can also contain small amounts 

of organic sulphur. 

Gas Turbine Generator 

Emissions and fuel specifications will 

require assessment for compliance with the 

Environmental laws and regulations applicable 

on the project site. Particular emphasis as part 

of this assessment would need to be placed 

on mercury (Hg) or other deleterious metals or 

gases including PM, NOx and SOx. 

Typical fuel specifications set by GT suppliers 

are provided in Section 6.5, Power Plant. 

Emissions of green house gases, in particular 

CO 2 , should be assessed for compliance with the 

environmental laws and regulations applicable 

on the project site in Queensland. In this report 

it is considered that CO 2 capture should, as a 

minimum, be technically feasible. The processes 

are discussed in the Section 6.4.3 below. 

Gas-to-Liquids Process 

Specifications for feed gas to Fischer Tropsch 

(F-T) synthesis are very tight, primarily due to 

requirements of the F-T catalyst. In particular, 

very low levels of sulphur and metals must 

be achieved. 

The requirements for the feed gas for the GTLplant 

are: 

• H 2 ÷CO ratio: 1.3 - 3 (varies with GTL 

conversion technology) 

• H 2 S+COS: ≤40 ppbv 

•V/Pb/Ni/Ca/Hg ≤0.1 ppmv (each) 

• As ≤0.3 ppmv 

High inert content or excess H 2 requires more 

purging from the F-T reactor loop, resulting in 

lower yields. 

The comparison of the feed gas specification 

for the GTL-unit and the available gasification 

product gas composition indicates the need 

for the following process steps: 

• removal of particulates (soot, ash) 

• hydrocarbon and water condensate removal 

• handling of trace components such as 

carbonyls that can cause problems in 

the various gas treating steps 

• removal of HCN, removal of COS, or 

conversion to removable sulphuric species 

along with other sulphuric compounds 

• removal of H S 2 

• adjustment of H ÷CO ratio 

2 

• removal of CO2 • syngas polishing for removal of trace 

components such as mercury, arsenic etc 

The sequence in which these gas treatment 

steps is undertaken depends on the specific 

requirements e.g. sulphur content of the gas to 

be processed and the side products arising from 

the gas treating steps. 


A significant number of gasification-based 

facilities have been built recently or are under 

development. A selection of Uhde references 

is provided in Table 4.1: (over the page). 


6.4.3. Particulates 

Particulates from UCG can be removed by wet 

scrubbing or a combination of scrubbing and 

filtration (e.g. candle filter). This is typically 

integrated with heat recovery from raw syngas. 

Syngas is cooled and then scrubbed in a wash 

tower, where the particulates are removed 

together with components that are easily 

absorbed in water, such as HCN, NH and HCl. 

3 

The resulting slurry is recovered and disposed. 

This configuration is commonly used in syngas 

plants. It is also possible to use a simple 

quench, where the syngas is cooled to below 

the dewpoint and particulates are removed 

with the condensate. 

Alternatively, ceramic or metal filter units can 

be used, at high temperatures, such as in use 

in several IGCC facilities. This is generally 

done where higher treated syngas temperature 

is preferred, such as for GT feed. Use of candle 

filters can be considered as alternative to 

scrubbing for the next development phase. 

6.4.3.2 Condensate 

The raw syngas arrives saturated from the wells 

and when cooled, liquid hydrocarbon (HC) and 

water form. Liquid HCs are separated from water 

and sent to storage. The heavier HCs contain 

phenols and unsaturates, including benzene and 

toluene. This stream can be used as fuel oil, 

or sold to e.g. oil refineries where it could be 

upgraded to gasoline/diesel blendstock. Other 

components that can be formed in gasification, 

such as dioxins, have not been observed in 

the Chinchilla gas samples. 

6.4.3.3 Acid Gas 

UCG syngas contains acid gases CO 2 , 

H 2 S, COS and possibly CS 2 . 

Surat Basin coal has relatively low sulphur 

levels resulting in low concentrations of 

H 2 S and COS in UCG syngas. H 2 S has been 

estimated to be between 0.03 vol% and 

0.1 vol% by Linc Energy. No levels for COS 

have been determined, but in coal gasification 

these are typically a small fraction of H 2 S and 

are expected to be in the 10-50ppmv range. 

Based on experience with acceptable emission 

levels for these types of plants, these sulphur 

levels are sufficiently low for GTG and therefore 

no additional treatment for sulphur would 

be required. 

GTL specifications are far more stringent 

and do require acid gas removal. Several 

technologies are available: chemical solvents, 

physical solvents and membranes. The two most 

applicable technologies for acid gas removal 

from syngas are chemical and physical solvents. 

Chemical solvents (e.g. amines) have high 

capacity and thus need low circulation rates, 

require smaller equipment and operate well at 

lower pressures. Solvent regeneration is with 


.60 

6 independent 

TABLE 4. Uhde Gasification Experience 

Client Location Capacity (Nm3/h) Completion Specialty 

Synenco 

TABLE 4.2 Rectisol - Select Applications Coal Feedstock 

Year Plant Location End use 

955 Sasol I Sasolburg, S.Africa F-T GTL 

979 Sasol II Secunda, S. Africa F-T GTL 

982 Sasol III Secunda, S. Africa F-T GTL 

983 Eastman Chemicals Kingsport, TN, USA MeOH, acetyl chemicals 

986 Rheinbraun Berrenrath, Germany MeOH 

987 CNTIC China NH 3 

994 Shanghai Pacific Chemical Corp China Town Gas 

996 Sokolovska Vresnova, Czech Rep. IGCC 

200 Henan China NH 3 


Fort McMurray, AB, 

Canada 

WMPI Gilberton, PA, U.S.A. 

830,000 CO+H 2 

5,000 bpd Shell Coal 

Gasification 

2009 

Lotos Energia Gdansk, Poland 196,000 CO+H 2 2007 

SGSI for OPTI Canada 

SGSI for Indian Oil Corp. 

Ltd. 

SGSI for Dongting 

Fertilizer 

Duke Energy Gas 

Transmission 

Long Lake, AB, 

Canada 

Paradip, India 

Shell asphalt gasification for H 2 /IGCC 

power plant for Oilsands project 

2007 Coal-to-Liquids Plant 

Shell asphalt gasification for H 2 / IGCC 

power plant 

320,000 CO+H 2 2003 Shell asphalt gasification for Oilsands project 

205,000 CO+H 2 ; 

111,000 H 2 

2002 

Petcoke gasification / refinery hydrogen and 

fuel gas for a 160 MW cogeneration plant 

Yueyang, PR China 142,000 CO+H 2 2002 Oil gasification and 220 MW power generation 

Chetwynd, BC, 

Canada (Kwoen 

plant) 

336,000 NG 2002 

SGSI for AGIP Petroli Sannazzaro, Italy 139,300 CO+H 2 2002 

Chemopetrol a.s. 

SEP for Demkolec 


Litvinov, Czech 

Republic 

Buggenum, The 

Netherlands 

First commercial application using Uhde“s 

Morphysorb® acid gas removal technology 

Shell vacuum residue gasification 

for IGCC power plant 

150,000 H 2 2001 Revamp oil gasification 

170,000 CO+H 2 

2000 

ELCOGAS S.A. Puertollano, Spain 181,000 raw gas 1998 

steam. For gasification based processes where 

acid gas removal is necessary, MDEA and 

Sulfinol are the most used chemical solvents, 

primarily for IGCC applications. 

Physical solvents, such as Selexol and Rectisol, 

are based on partial pressure of the acid gas and 

are preferred at higher pressures. Regeneration 

is largely by pressure reduction, thus requiring 

much lower energy input than amines. Chilled 

Rectisol removes H 2 S and also COS and 

carbonyls. Removal of COS is less effective 

with Selexol. Rectisol has been used in the 

Sasol facilities, but has higher equipment cost 

than Selexol. Selexol uses a proprietary solvent 

which is more costly. 

Consulting for Shell coal and biomass 

gasification for IGCC power plant 

First commercial application using Uhde’s 

PRENFLO® process for the gasification of 

petcoke and coal in a 300 MW IGCC 

power plant 

It is common practice to remove COS by 

catalytic conversion to H 2 S in a hydrolysis 

reactor upstream of the acid gas removal step. 

This reactor will also convert lighter organic 

sulphur to H 2 S.

Recovered H 2 S is generally processed in a 

sulphur recovery unit (SRU), typically either 

a catalytic Claus unit or a liquid redox unit, 

such as LoCat. Claus produces a liquid salable 

sulphur. Liquid redox product can be landfilled 

or possibly used as fertilizer. 

Water containing CO 2 , H 2 S, hydrocarbons and 

NH 3 will be stripped and reused in the process. 

Stripper offgas is recovered and flared or sent 

to the SRU. 

REFERENCES 

Rectisol (Lurgi/Linde): over 100 units 

Selexol (UOP): over 55 units 

6.4.3.4 Trace Components 

Mercury, Arsenic 

Mercury and arsenic are often contained in low 

concentrations in syngas from coal gasification. 

Although only present in trace amounts in the 

range of ppbv, they represent catalyst poisons 

for the Fischer-Tropsch-process. This hazard can 

be dealt with using dedicated adsorbent vessels 

that are installed downstream of the gas treating 

as a final polishing step for the GTL feed gas. 

Adsorbents for the removal of these trace 

components are available from several suppliers. 

The size of the required adsorber beds is more 

influenced by the gas flow to be treated than 

by the amount of impurities to be removed. 

The system can use activated carbon, which is 

consumed, or be based on a regenerable system, 

such as zeolytes. Significant experience exists 

with both, predominantly in the natural gas 

industry. Removal levels to around 1ppt (part 

per trillion) have been demonstrated. In addition 

to Hg, specific other trace components, such as 

carbonyls, are also removed. 

REFERENCES 

Calgon Type HGR: extensive 

UOP HgSIV: over 30 units 

Carbonyls 

In above ground coal gasification, nickel and 

iron carbonyls are formed in the presence of 

high carbon monoxide partial pressure and 

within a certain temperature range, together with 

the nickel and iron containing gasifier and waste 

heat boiler materials. These impurities tend to 

decompose and to form iron layers on the active 

surface of catalysts as the temperature increases. 

To avoid problems of plugging and deactivation 

of catalyst in the gas path downstream of the 

gasification unit, e.g. COS hydrolysis catalyst, 

these carbonyls have to be removed. Also, it has 

been found that when fired in gas turbines these 

components decompose and plate metal on the 

turbine blades. Carbonyls can also be captured 

on the top layer of COS catalyst. With plant turn 

arounds, this layer needs to be replaced with 

fresh catalyst. 

This technical due diligence has not identified 

any international UCG applications where metal 

carbonyls are formed in the above ground 

systems. If more detailed analyses do show 

presence of carbonyls, existing processes can 

be applied to remove these components to levels 

acceptable for downstream catalytic processes. 

Conventional chemical amine acid gas removal 

is not effective in removal of these components. 

Physical absorption processes such as Rectisol 

and Selexol have been demonstrated to 

effectively remove the carbonyls simultaneously 

with the acidic components hydrogen sulphide 

and carbon dioxide. Mechanical and carbon 

filter elements are used to avoid equipment 

fouling. There are also instances of gasifiers 

where limited laydown of solids is accepted and 

equipment is cleaned with turn arounds. 

If the carbonyls cannot be removed by the 

downstream gas washing process, it is 

possible to use dedicated adsorbents. 

6.4.3.5 SOx, NOx 

Current IGCC projects achieve international 

NOx emissions standards by use of diffusion 

combustors to handle high flame velocities 

with H 2 rich gas, and by injecting steam or N 2 to 

reduce flame temperatures. Low SOx emissions 

are achieved by removal of H 2 S from the syngas. 

Emissions from a possible GTG configuration 

are addressed in Section 6.5. 

Any future ultra-low NOx standards (≤10 ppmv) 

could require selective catalytic reduction 

in the flue gas. This technology is in use in 

locations with low NOx emission standards. 

Use of SCR generally requires deeper removal 

of sulphur from the syngas to avoid formation 

of ammonium bisulfate that can deposit in the 

colder sections of closed cycle units, and 

cause corrosion. 

6.4.3.6 Composition 

Syngas for GTG has to meet a minimum heating 

value. Air blown gasification introduces inert 

N 2 , which further reduces the gas heating value. 

CO 2 can be removed from GTG feed to improve 

heating value. 

It is also possible to convert CO in the syngas 

to make H 2 , by water-gas-shift (WGS). This is 

a commonly applied reaction and could be 

used in the future to convert the syngas into 

essentially all H 2 and CO 2 (and N 2 ). The CO 2 

can be removed as part of the acid gas removal 

step, leaving a H 2 rich gas. 

Similarly, in GTL plants WGS is used to 

increase the H 2 ÷CO ratio. 

6.4.3.7 Pressure 

Chinchilla raw syngas is available from the 

production wells at roughly 1100 kPag. The gas 

treatment processes described above all operate 

at gasification pressure and have relatively 

small pressure losses. Depending on the 

selected configuration, pressure losses for 

GTG service will be 200-400kPa for GTG and 

300-500kPa for GTL. 

Optimum treated syngas pressure for GTG is 

approximately 2500kPag. For GTL, preferred 

syngas pressure is 2000-3500kPag. For both 

configurations, syngas has to be compressed 

in either a single stage or a two-stage machine. 

The compression ratios, flow rates, 

compositions and power requirements are 

well within the range of commercially available 

machines. For 40MW GTG, compression power 

is approximately 4MW. Syngas can be produced 

at higher pressures if the UCG takes place at 

greater depths, but more power is required for 

air compression. 

Syngas compression for GTL can be done 

upstream or downstream of the acid gas removal 

step. Downstream the AGR the syngas volume 

is reduced, but AGR with a physical solvent is 

more efficient at higher pressures. Location of 

the syngas compressor needs to be optimised. 


.62 

6 independent 



6.4.4. Waste Streams/By-Products 

Liquid effluent is generated from gas scrubbing 

and water condensate. The effluent consists of 

produced water, with particulates and dissolved 

gases, hydrocarbons and numerous salts. 

Dissolved gases and volatile HC’s can be 

removed by steam assisted stripping. Offgases 

from sour water stripper and AGR are sent to 

flare or SRU. 

Solids are recovered from the slurry by filtration. 

Liquid effluents are directed to water treatment 

and/or evaporation pond. The dissolved 

hydrocarbons and salts may accumulate in the 

pond with time. It is proposed to undertake soil 

remediation of the pond area at the end of the 

plant life. 

Gaseous effluents (such as from water flash) 

will be directed to atmosphere. 

Solid wastes from water treatment are treated 

and sent to landfill. Spent catalyst is returned 

to catalyst suppliers or disposed of (Hg guard, 

COS hydrolysis). 


The critical component in design and 

construction of the gas clean up section for 

an open cycle 40MW GTG is the syngas 

compressor. Estimated delivery is in excess of 

one year; overall project implementation may be 

2+ years. Opportunities to reduce this schedule, 

through for example the procurement of used 

equipment, have not been investigated. 

The critical path in design and construction 

of a GTL application will be the F-T synthesis 

and upgrading sections and not the clean up 

section. Schedule requirements for fabrication 

and construction of GTL facilities are discussed 

in Section 6.6.6. 


There is much industry experience with coal 

gasification for both power generation and GTL. 

Processing steps used for gas clean up for both 


applications, with similar impurities and 

capacities, are well proven and readily available. 

Furthermore, experiences with gasification of 

other feedstock and with syngas from other 

processes are directly applicable to the 

proposed concept for Linc Energy. 

For power generation, as demonstrated in 

several recent IGCC projects, the industry 

preferred combination appears to be: 

• particulates removal by scrubbing or filtration 

• sulphur removal by amine or physical 

solvent, possibly followed by Hg removal 

A future facility may also include COS 

hydrolysis, CO 2 capture, and possibly 

conversion of CO to H 2 to minimize green house 

gases. Significant experience exists with all 

these processes on a wide scale of syngases. 

F-T synthesis based on coal gasification has 

been demonstrated commercially for more 

than 50 years by Sasol. The preferred technical 

solution for gas clean up is gas scrubbing 

followed by refrigerated Rectisol for acid gas 

removal. Air blown gasification leads to larger 

equipment in the clean up section, but all well 

within the range of commercial experiences. 

Future emissions standards should be 

ascertained and assessed relating to acid gas, 

metals and trace components. In general, 

because of higher operating pressure, gas 

purification steps can be performed at lower cost 

from gasification product than from combustion 

flue gas. Therefore a UCG based project is better 

positioned to handle any future regulations. 

6.5. Power Plant 


Electricity can be generated with a syngas 

feedstock using the following methods: 

• Combustion in a Gas Turbine Generator (GTG) 

• Combustion in a boiler to produce steam to 

drive a turbine 

A GTG is the preferred method to produce 

30-40MWe due to the inherent operating 

flexibility, high efficiency, relatively low 

capital and installation costs. 

GTG systems can be designed as open cycle 

(OC), also known as simple cycle, in which 

the flue gases from the turbine are vented to 

atmosphere or as combine cycle (CC) where the 

flue gases are passed through a heat recovery 

steam generator (HRSG). The HRSG produces 

steam that can either be used for power 

generation or as a process utility. A combine 

cycle system is more efficient than an open cycle 

but the initial capital outlay and plant complexity 

is greater. 

GTG’s are typically sold as packaged units with 

an owner/supplier interface for utilities, fuel 

input and power output. 

A large number of gas turbines are fired using 

natural gas but due to economic issues and 

environmental constraints, fuels with lower 

heating values such as metallurgical off gas, 

petroleum recovery off gas, air blown syngas 

and oxygen blown syngas are being used in 

gas turbines for power generation. Gas turbines 

suited to syngas applications have basic 

technical and functional requirements that differ 

to natural gas applications. 

Important parameters that should be taken into 

consideration for use of a GTG on a syngas 

application are: 

• Fuel gas specification – lower heating 

value (LHV), modified wobbe index 

(MWI), contaminants, liquids, etc. 

• Performance 

• Vendor technology and experience 

• Modifications for syngas applications 

• Environmental issues – gas emissions 

• Construction – schedule, cost 

• Connection to grid (excluded) 

• Market for power (excluded) 

GE Power submitted a proposal to Linc 

Energy in October 2001 for one PG 6581B 

(GE Frame 6B) GTG unit for outdoor location 

and this portion of the report is based largely 

on this proposal.


A large number of power generation projects 

using gasification to prepare the feedstock are 

either in the planning or engineering phases. 

Projects range in size from a 15MWe facility 

using biomass/waste as a gasifier feedstock, 

to a 1050MWe facility using petroleum as a 

gasifier feedstock (Sannazzaro GCC Plant). 

GE reports that it has recently purchased 

ChevronTexaco gasification technology, which 

enables better linking of GE turbines with 

syngasapplications and allows GE to provide 

a full set of guarantees and warrantees 

for the gasification island. 


TABLE 5. Typical Fuel Gas Specifications for Heavy Duty Gas Turbines 

Fuel Properties Max Min Notes 

Gas fuel temperature 

Gas Clean Up & Supply 

Fuel gas compositions upstream of the GT are set 

to meet emission regulations, and for protection 

of the turbine. The fuel gas supply conditions 

and allowable contaminant levels detailed in 

Tables 5.1 & 5.2 are typical for industry but the 

requirements do vary and are dependent on 

selected turbine & supplier. No obstacles are 

foreseen in meeting these requirements. 

Performance 

The performance of a gas turbine can be 

measured by the heat rate. The heat rate is defined 

as the fuel gas consumption (LHV) divided by 

the output (kWh). The proposal submitted by 

GE estimates the heat rate to be approximately 

Varies with 

gas pressure 

Gas fuel pressure Varies Varies 

10350kJ/kWh. Reviews of other gas turbines 

of similar size indicate typical heat rates of 

between 9000 and 12000kJ/kWh.Efficiency of 

the turbine based on energy supplied to the unit 

is approximately 35%, which is acceptable for 

an open cycle unit. Net plant efficiencies for 

a similar sized combined cycle unit would be 

approximately 50%. 

Gas Turbine Modifications Required for Firing 

of Low Calorific Value Fuel 

Low calorific value fuel applications encompass a 

wide variety of operational demands and fuel gas 

composition changes. In order to achieve efficient 

and reliable operation, modifications primarily to 

the combustion and fuel system but also to the 

special fire protection, packaging and controls 

need to be incorporated into the GT design. 

Minimum gas temperature needs to be such that supply to the turbine is 100% free of liquids. In 

the proposal submitted by GE, the industry standard of 28°C of superheat above the hydrocarbon 

& water dew point was requested. 

Dependent on unit and combustor type. GE proposal requires a supply pressure 

between 2200 and 2500kPag 

Lower heating value (MJ/Nm 3 ) None 3.9 – 12 Range is provided only as a guideline, fuel analysis should be provided for review by vendor 

Modified wobbe index (MWI) MWI is a relative measure of energy injected to combustor at a fixed pressure ratio 

- Absolute limits 54 40 Fuels outside this range may be acceptable but additional design/development will be required 

- Range within limits +5% -5% Variations of MWI greater than ±5% may be acceptable but need to be analyzed by the vendor 

Flammability ratio * 2.2:1 

(Extracted from GE Power Systems specification for fuel gases for combustion in heavy-duty gas turbines 2002) 

TABLE 5.2 Typical Allowable Gas Fuel Contaminant Levels for GE Frame 6B Gas Turbine (ppmw) 

Trace Metals ppmw 

Lead 0.08 

Vanadium 0.04 

Calcium 0.16 

Magnesium 0.16 

Sodium + Potassium 

(Na/K) = 28 0.08 

(Na/K) = 3 0.04 

(Na/K) =< 1 0.024 

Particulates 

Total 2.4 

Above 10 Microns 0.024 

* Fuels with a flammability ratio significantly higher than natural gas may require a startup fuel, 

Fuels normally reviewed on a case by case basis 


.64 

6 independent 

Syngas gas turbines typically require natural gas 

or distillate as a start-up fuel and are thus dual 

fuel capable. This allows switching from one fuel 

to another, or co-firing both fuels, while running 

under load. Consideration should be given to the 

heavy hydrocarbon produced in the gas clean 

up process and whether this can be fired in 

the turbine. 

In typical IGCC facilities it is common to 

maintain the gasification process as steady 

as possible and allow the turbine operation to 

fluctuate. Backup fuel can be fired when syngas 

is limited or when there is an opportunity to 

respond to spot market demand. This has not 

been investigated further. 

Linc Energy, Ergo Exergy, and CS Energy in 

cooperation with GE have undertaken detailed 

technical and cost investigations into the 

conversion of GE’s Frame 6 (nominal 40MWe) 

turbines and have determined that the following 

modifications are required: 

• Burner replacement 

• Fuel lines, valves & pressure 

regulator replacement 

• Control systems upgrade 

• Air extraction installation off the 

turbo-compressor section 


GE’s can-annular combustor design allows it to 

burn multiple fuels and results in excellent flame 

stability and mixing properties that produce 

very low emissions. 

Siemens have incorporated a silo-combustor 

design into their standard gas turbines to 

allow operation using low calorific fuel. The 

silo-combustor design, as opposed to the 

can-annular design of most GE and Alstom 

turbines, reduces the extent of gas feed/control 

system modifications. 


GE has evaluated the syngas produced at 

Chinchilla and has determined that the Frame 

6B heavy duty industrial turbine is acceptable for 

the required 30-40MWe duty based on the UCG 

syngas base case composition. The base case 

composition was supplied to Shedden Uhde in 

2001 for a report compiled on UCG Gas Clean 

Up Plant Design & Costing. 

6.5.3. Technology Providers 

Several companies have developed a range 

of gas turbines applications suited to low and 

medium calorific value gas applications, such as 

IGCC applications. These include Alstom, GE, 

Hitachi, Mitsubishi and Siemens. 

GE 

GE offers several gas turbines that are 

specifically suited to conversion from natural 

gas to low calorific value fuels such as air blown 

or oxygen blown syngas, and are supported by 

GE in the USA: 

TABLE 5.3 IGCC projects detailing type of gas turbine, duty, start date 

and hours of operation dependent on fuel type 

Customer Type MW 

• Frame 5 – PG 5371 (25MWe) 

• Frame 6 – PG 6541B, PG 6551B & 

PG 6561B (35 – 45MWe) 

• Frame 9 – 9171E (170MWe) 

GE Syngas Hours of Operation - September 2002 

Syngas 

Start Date 

Hours of Operation 

Syngas N.G. Dist 

Cool Water 107E 120 5/84 27,000 - 1,000 

PSI 7FA 262 11/95 24,500 1,800 4,100 

Tampa 107FA 250 9/96 33,500 - 7,101 

Texaco El Dorado 6B 40 9/96 30,660 56,372 - 

Sierra Pacific 106FA 100 - 0 48,438 - 

SUV Vresova 209E 350 12/96 90,040 1,715 - 

Schwarze Pumpe 6B 40 9/96 37,600 - 3,800 

Shell Pernis 2x6B 80 11/97 58,250 22,687 - 

ISE / ILVA 3x109E 540 11/96 141,000 4,732 - 

Fife Energy 6FA 80 - 0 26,220 - 

Motiva Delaware 2x6FA 240 8/00 450 - 5,290 

Sarlux 3x109E 550 10/00 33,100 - 10,500 

Plombino 109E 150 10/00 12,400 2,930 - 

Exxon Singapore 2x6FA 180 3/01 9,700 12,776 921 

Refinery Applications Totals 499, 00 

GE has a wide range of experience and product 

technology, which has been incorporated into 

many IGCC applications. Five refinery based 

IGCC projects using GE designed gas turbines 

have gone into commercial operation between 

1996 and 2001. These five projects are broken 

down into three heavy oil gasifiers (Shell Pernis, 

Sarlux & Exxon Singapore) and two petroleum 

coke gasifiers (Texaco El Dorado & Motiva 

Enterprises). Power generation from these 

projects ranges from 40MW to 550MW. Table 

5.3, extracted from “GE Power Systems – IGCC 

gas turbines for refinery applications”, details 

these and other IGCC applications including 

hours of operation and fuel type.

Between 2001 and 2005 GE has been involved in 

several IGCC applications with power generation 

ranging from 120MW for the FIFE facility to 

800MW for the PIEMSA facility. 

Table 5.4 is an extract from GE Power 

Systems – IGCC Gas Turbines for Refinery 

Applications, which details GE gas turbines 

syngas capabilities. Stream compositions and 

heating values are indicated for a wide range of 

applications, including those applications using 

LCV fuels. As can be seen the composition and 

heating value of the syngas varies significantly. 

The gas produced, at Chinchilla, from the 

air blow underground gasification of coal is 

considered a low calorific value fuel with a 

lower heating value (LHV) in the range of 4 to 

5 MJ/Nm 3 . As can be seen from Table 5.4, GE 

has experience with fuels with a range of LHV’s 

between 5 and 12.5 MJ/Nm 3 pre dilution and 

4.3 to 8 MJ/Nm 3 post dilution. The Chinchilla 

syngas is not diluted but fired, as is, in 

the turbine. 

TABLE 5.4 GE Power Systems Demonstrated Syngas Fuel Flexibility 

Demonstrated: Syngas Fuel Flexibility 

Syngas 

PSI 

Tampa 

El Dorado 

Pernis 

Sierra 

Pacific 

ILVA 

Schwarze 

Pumpe 

Sarlux 

Siemens 

Siemens gas turbines that are specifically suited 

to conversion from natural gas to low calorific 

value fuels include: 

• V64.3 (80MWe) 

• V94.2 (160MWe) 

• V94.3 (265MWe) 

H 2 24.8 37.2 35.4 34.4 14.5 8.6 61.9 22.7 34.4 44.5 32.0 42.3 10.3 

CO 39.5 46.6 45.0 35.1 23.6 26.2 26.2 30.6 55.4 35.4 49.5 47.77 22.3 

CH 4 1.5 0.1 0.0 0.3 1.3 8.2 6.9 0.2 5.1 0.5 0.1 0.08 3.8 

CO 2 9.3 13.3 17.1 30.0 5.6 14.0 2.8 5.6 1.6 17.9 15.8 8.01 14.5 

N 2 + AR 2.3 2.5 2.1 0.2 49.3 42.5 1.8 1.1 3.1 1.4 2.15 2.05 48.2 

H 2 O 2.7 0.3 0.4 - 5.7 - - 39.8 - 0.1 0.44 0.15 0.9 

LHV 

– BTU/ft 3 209 253 242 210 128 183 317 163 319 241 248 270.4 134.6 

- kJ/m 3 8224 9962 9528 8274 5024 7191 12492 6403 12568 9477 9678 10655 5304 

T fluid F/C 570/300 700/371 250/121 200/98 1000/538 400/204 100/38 392/200 100/38 350/177 570/299 338/170 - 

H 2 /CO Ratio 0.63 0.80 0.79 0.98 0.61 0.33 2.36 0.74 0.62 1.28 0.65 0.89 0.46 

Dilutent Steam N 2 N 2 /Steam Steam Steam - Steam Moisture H 2 O Steam H 2 O/N N 2 n/a 

Equiv. LHV 

-BTU/ft 3 

150 118 113 * 198 110 - 200 - * 116 150 129 134.6 

-kJ/m3 5910 4649 4452 7801 4334 - 7880 - - 4600 5910 5083 5304 

* Always Co-fired with 50% natural gas - Refinery Projects 

Fife 

Exxon 

Singapore 

Motiva 

Delaware 

PIEMSA 

Tonghua 


.66 

6 independent 


Table 5.5 provides an indication of the range of Siemens gas turbines that have been used in IGCC applications extracted from the report “UCG in 

Australia Development to Date and Future Opportunities” by Linc Energy, Ergo Exergy & CS Energy. 

TABLE 5.5 Application of Siemens Gas Turbine Technology for Utilisation of Syngas and Steel-Making Recovery Gases 

Customer/Plant Location 


Electrical 

Output 

(net) MW 

Gas 

Turbine 

Feed Stream Startup LHV kJ/Nm 3 

Hörde Steelworks (Dortmund, Germany) 8 VM5 Blast Furnace Gas 1960/ 2000 

U.S. Steel Corp. (Chicago, USA) 20 CW201 Blast Furnace Gas 1960 

STEAG/Kellermann (Lünen, Germany) 163 V93 Coal 1972 5025 

DOW Chemicals (Plaquemine, USA) 208 4) 2 x W501D5 Coal 1987 

Nuon Power Buggenum 6) (Buggenum, Netherlands) 253 V94.2 Coal & Biomass Blend 1993 3) 1994/95 4459 

Elcogas 1) (Puertollano, Spain) 300 V94.3 Coal & Petroleum Coke Blend 1996 3) 1997/98 4846 

ISAB Energy (Priolo, Italy) 521 2 x V94.2K 5) Heavy Oil 1998 2) 1999 7053 

1) Demonstration plant 2) Oil firing 3) Natural gas firing 4) 160MW from syngas and 48MW from natural gas 5) V94.2K = V94.2 with modified compressor 

6) Former “Demkolec” coal-based demonstration plant 

6.5.4 Products & Performance 

Power Balance 

The net power produced by the process needs 

to take into account the power consumed in the 

production of the syngas, the power consumed 

in preparing the syngas for the gas turbine and 

other miscellaneous utilities. 

For a 30-40MWe facility at Chinchilla, 

compressed air is introduced to the coal seam 

via a production well consuming approximately 

7.7MW. Air extracted from the turbine can be 

used for UCG and if this is allowed for then the 

power consumed drops to approximately 6MW. 

Approximately 3.9MW is required to 

compress the syngas to the required 

turbine supply pressure. 

A rough approximation of the power consumed 

by the process is therefore 10MW, allowing for 

air extraction from the turbine and other utilities. 

GE estimate the gross output to be approximately 

44MWe and thus the net power output available 

for export is approximately 34MW. 

6.5.5 Environmental 

SO 2 is a product of combustion and is a function 

of the H 2 S and COS and other sulphur bearing 

compounds in the feed. A sulphur 

analysis provided by Linc Energy indicates that 

there is approximately 445ppmv sulphur in the 

UCG syngas. The estimated SO 2 production 

for an open cycle gas turbine is approximately 

655 mg/MJ, based on 44MW or 850 mg/MJ 

based on 34MWe exported. Based on our review 

of comparable US plants the design criteria 

appears to specify emission levels of 515 mg/ 

MJ. For closed cycle power generation, sulphur 

removal is required to prevent equipment 

damage in the downstream HRSG due to acid 

gas formation. For an open cycle GTG, sulphur 

removal is not normally required for equipment 

protection although emission requirements will 

need to be reviewed with the EPA. 

The proposal prepared by GE indicates that the 

NOx emissions will be approximately 266mg/ 

Nm 3 with typical limits of 200-400mg/Nm 3 being 

common. 

The recommended target limit for particulate 

emission is 12.8 mg/MJ. Based on the facility 

producing 44MW of power and a gas turbine 

supplier maximum particulate feed specification 

of 2.4ppmw, the particulate emission post clean 

up is approximately 1.4 mg/MJ (1.8ppmw 

if 34MW basis used). If the turbine supplier 

particulate specification is met during the 

gasclean up the particulate emissions from 

the turbine will fall well within this 

recommended requirement. 

The CO 2 emission from the proposed open cycle 

facility is approximately 1175 kgCO 2 / MWh 

based on 44MW or 1520 kgCO 2 / MWh based 

on 34MWe exported. 

During UCG, underground cavities are formed 

and these may be used for subsequent CO 2 

sequestration. A commercial process, such 

as Rectisol, could be used to remove the CO 2 

upstream of the turbine for sequestration. This 

would significantly reduce CO 2 emissions from 

the plant. 


The required timeframe from order placement 

to ready for operation (RFO) depends on the 

supplier’s order book, the selected machine, 

modifications required and time required for 

construction and commissioning. 

Information received from GE Energy Australia 

& NZ and Alstom Power Australia indicates the 

following required schedule for procuring a 

new unit: 

• 10 – 12 months ex works 

• 1.5 months delivery 

• 2 months construction 

• 1.5 months commissioning, 

resulting in an overall time period of 

approximately 17 months from order 

placement to RFO.

An alternative option is to source a second hand 

unit and modify it accordingly. GE indicated that 

the fuel system modifications are performed 

in house, usually on site during construction. 

Thomassen Turbine Systems can also perform 

the required modifications on previously owned 

GE-design heavy-duty gas turbines. 

An estimated schedule, based on information 

supplied by GE, for procuring a second hand 

unit would be: 

• 1.5 months for removal from 

existing site if sold as is where is 

• 1.5 months delivery 

• 4 months for fuel system modifications 

& testing if carried out by original 

equipment manufacture (OEM) – 

modifications engineered concurrently 

with delivery/construction 

• 2 months construction 

• 1.5 months commissioning, 

resulting in an overall time period of 

approximately 7 months from order 

placement to RFO. 

Linc Energy estimated the capital cost of 

the facility (UCG, clean up & GTG) to be 

approximately $43 million in early 2004. 

The gas processing plant accounted for 

$17.5 million, whereas the GTG accounted for 

$25.5 million, based on the procurement of a 

new GE Frame 6 GTG modified to work with 

low calorific value syngas. 

A second hand GE Frame 6 GTG, pre 

modification, range in cost between $8.8 million 

and $13.9 million (information available from 

different online suppliers). Modification cost of 

this unit ranges between $1.5 and $2 million, 

based on an estimation by Linc Energy after 

meetings with Thomassen Turbine Systems. 


Gas to power generation is an established 

technology proven in syngas service. Turbine 

vendors have experience in supplying units for 

applications similar to Linc Energy’s possible 

GTG development. 

A power balance performed on the plant 

indicates that the net power produced is 

approximately 34MW. Based on the GTG 

producing 44MW of power the CO 2 emissions 

are approximately 1175 kgCO 2 / MWh. 

GE Power has submitted a proposal to Linc 

Energy in which they indicate that the GE Frame 

6B turbine is suited to the Chinchilla syngas and 

it is estimated to produce 44MW of power based 

on the base case fuel composition supplied by 


The approximate timeframe from order 

placement to RFO for a new GE Frame 6B 

turbine is 17 months, or 7 months for a 

second hand unit. 

6.6. Gas to Liquids 


Gas-to-Liquids (GTL) is the term used to 

describe the process of converting a gas into a 

liquid hydrocarbon product and can be achieved 

through direct liquefaction of a gas, such as 

liquefied natural gas (LNG), or through the 

chemical conversion of a gas to a liquid. The 

chemical conversion of a synthesis gas (syngas) 

to liquid hydrocarbons can be achieved via the 

Fischer Tropsch (F-T) reaction, however syngas 

may also be converted to oxygenates, such 

as methanol. 

The process of direct liquefaction will not be 

discussed further in this document since it 

requires a feedstock not applicable to the 

Linc Energy project. 

GTL processes may include either solid, 

liquid or gas feed stocks. Feedstocks are first 

converted to a syngas via other processes such 

as gasification. In this report, GTL will refer 

only to the process of converting syngas to 

liquid hydrocarbons via the F-T process. Global 

experience with this process may be directly 

applied to the Linc Energy proposed concept. 

The production of oxygenates from syngas 

has not been addressed in this analysis. It is 

however a very mature industry and the gas 

clean-up steps used for the F-T process have 

also been widely applied to the production 

of oxygenates. 


In the late 1800s and early 1900s, experiments 

had demonstrated the catalytic conversion of 

carbon monoxide (CO) and hydrogen (H 2 ) to 

methane and oxygenates. In the early 1920s, 

Franz Fischer and Hans Tropsch developed 

a process where coal is first converted to a 

synthesis gas (syngas), and subsequently 

to hydrocarbon chains (synfuels). This was 

patented in 1925 and in the 1930s commercial 

facilities were operating in the German Ruhr 

Valley, producing synthetic petroleum 

and diesel. 

During the Second World War, Germany 

achieved production of some 16,000 bpd 

synfuels. In the same period, pilot plants were 

operating in Japan, the US and UK. Discovery of 

large oil reserves and improvements in refining, 

introduced cheap gasoline and diesel. F-T 

developments were reduced significantly, 

with some notable exceptions. 

In 1953 Hydrocarbon Resources built the 5,000 

bpd natural gas fed Carthage-Hydrocol Plant 

in Brownsville, Texas, and in 1955, Sasol built 

their first coal-to-oil facility in Sasolburg, South 

Africa, to produce synthetic oil and chemicals. 

The first and second oil crises in the 1970s 

revived interest in F-T technologies with several 

of the major oil companies initiating or 

resuming research. 

In the late 1970s and early 1980s, Sasol built 

two additional coal-to-oil facilities (Sasol II & 

III) at Secunda. The combined Sasol I, II & III 

capacity is approximately 150,000 bpd. 

Also in the 1970s, Mobil developed a zeolite 

based methanol-to-gasoline (MTG) process, 

which was used commercially in New Zealand in 

a plant that went on stream in 1985. Around the 

same time a fluid bed MTG demonstration unit 

was tried in Germany. 


.68 

6 independent 

South Africa expanded its GTL capacity in 1991, with the start up of the Mossgas plant, which uses natural gas and condensate feedstock 

with Sasol F-T technology. 

Shell had been operating a pilot facility in its Netherlands facilities since 1983, with its own gasification and F-T technologies. In 1993, a 

commercial natural gas fed scale plant went on stream at Bintulu in Malaysia. 

The last years have seen a renewed interest in GTL projects. 

A number of commercial GTL facilities are being implemented and a larger number being considered at various places. Several of these are in advanced 

stages of engineering; others are in feasibility review. The table below lists a number of these facilities, with data from public domain. This table is not 

comprehensive, but rather provides an indication of the level of activity in commercial GTL applications. Feedstock for these new developments 

is generally either stranded gas or coal. 

TABLE 6. Select Gas-to-Liquids Facilities under Consideration 

Technology Capacity (bpd) Location (Project) Status 

Sasol 34,000-100,000 Qatar (Oryx) Construction (Start up 1Q06) 

SasolChevron 34,000 Nigeria (Escravos) Detailed design 

Sasol 5,000 Gilberton, PA, USA (WMPI) Planned for 2007 

Shell 140,000 Qatar (Pearl) Design 

Shell 70,000-75,000 Iran, Indonesia, Argentina, Egypt, Trinidad & Tobago Planning 

ConocoPhillips 80,000-160,000 Qatar Planned for 2010 

Marathon Oil 140,000 Qatar Planning 

ExxonMobil 80,000-150,000 Qatar Planned for 2011 

ExxonMobil 100,000 Alaska Planning 

ExxonMobil 50,000 Angola Planning 


6.6.3. Gas-to-Liquids Process 

Fischer Tropsch Conversion 

The basis of F-T synthesis is the growth of 

carbon chains by reacting carbon monoxide 

with hydrogen: 

nCO + (2n+1)H 2 CnH2n+2 + nH 2 O 


The F-T synthesis is in essence a polymerisation 

reaction that takes place over a catalyst, which 

is typically iron, cobalt or ruthenium based. 

Depending on operating conditions, longer or 

shorter chains are produced, with longer chained 

hydrocarbons being more valuable. Iron catalyst 

can operate in a wider range of CO÷H 2 ratios, 

is lower cost, but also promotes the water 

gas shift reaction and produces shorter 

hydrocarbon chains. 


The equation above shows the syngas ideally 

has a H 2 ÷CO ratio slightly greater than 2÷1. 

The F-T reactions are exothermic, generating 

heat. To provide high energy efficiency, the GTL 

facility will incorporate significant heat recovery 

and associated power generation. 

Upgrading 

Products from F-T reactions will be a mix 

of hydrocarbons. Large new generation GTL 

plants are aimed primarily at producing middle 

distillates for transportation fuels. Smaller 

plants may be focused on specialty markets for 

eg chemicals, base oils and waxes. Upgrading 

of F-T reactor effluent to end products 

generally involves fractionation, hydrotreating, 

hydrocracking and isomeriation. All these steps 

have been widely used in the oil refining industry 

for many decades. 

6.6.3.2 Technology Providers 

A number of companies have developed 

proprietary F-T technology for commercial 

applications. These can roughly be divided 

in 1) major oil companies that implement 

or participate in projects where they apply 

their know-how, and 2) licensors of in-house 

developed technologies. Of those listed below, 

only Syntroleum and Rentech have an open 

strategy of licensing their F-T technology. 

Others license on case by case basis. 

Described in this Section are technologies with 

either commercial experience or with long term 

pilot or demonstration facilities. There are other 

technology providers that could be considered.

Sasol 

Sasol have more than 50 years operating 

experience with both high temperature and low 

temperature F-T synthesis and over the years 

have improved the F-T catalyst and reactor 

design. The original Sasol I plant was based 

on Arge tubular fixed bed reactors. 

The Sasol Slurry Phase Distillate process 

(SSPD) uses a slurry-bubble reactor at lower 

temperatures and has been operating on 

commercial scale for more than 12 years. The 

Sasol Advanced Synthol process (SAS) uses 

a fluid bed reactor at higher temperatures 

and has been operating since 1989. 

Sasol has entered in a number of strategic 

partnerships, such as with Engelhard for the 

manufacturing of F-T catalyst, with Statoil for 

floating production facilities, and with 

Chevron for upgrading of F-T products. 

Sasol does not actively license its technology 

but is a partner in a number of international 

GTL developments. 

Royal Dutch/Shell 

Shell has been conducting pilot scale operation 

for several decades and has approximately 

10 years operating experience with the 

commercial scale Bintulu facility. 

The Shell Middle Distillates Synthesis 

technology (SMDS) is a three step, integrated 

process of gasification, modified F-T synthesis 

and upgrading. The SMDS F-T synthesis uses 

a proprietary cobalt based catalyst in a low 

temperature fixed bed reactor. 

SMDS technology is generally not licensed, 

but is being applied in a number of world wide 

GTL developments in which Shell is a partner. 

ExxonMobil 

ExxonMobil’s integrated GTL technology, 

Advanced Gas Conversion for the 21st Century 

(AGC-21), uses a slurry phase bed with 

proprietary cobalt based catalyst. Pilot facilities 

in Baton Rouge were started in 1990 with current 

larger scale investigations. ExxonMobil have 

long experience with a wide range of upgrading 

technologies. AGC-21 is generally not available 

for licensing. 

ConocoPhillips 

ConocoPhillips operates a 400 bpd 

demonstration plant and GTL research facility 

in Ponca City, Oklahoma. The technology 

uses cobalt catalyst in a slurry phase reactor. 

Syntroleum 

In the Syntroleum process synthesis gas is made 

by air blown autothermal reforming. Syntroleum 

have operated pilot facilities since 1990 in Tulsa, 

in 1999 at the Arco Cherry Point refinery and 

the recent Catooga demonstration plant, using 

a variety of reactors. A number of companies 

license the Syntroleum Process, including the 

Australian Government. Syngas composition 

of air blown reforming is similar to that derived 

from air blown UCG. The Syntroleum Process 

has extensive experience with syngas containing 

about 50% nitrogen and can tolerate relatively 

high levels of CO 2 . 

TABLE 6.2 Existing Gas-to-Liquids Facilities 

Year Company Capacity (bpd) Location 

Commercial Facilities 

Rentech 

Rentech have developed and licenses patented 

F-T technology, based on a slurry phase reactor 

with proprietary iron catalyst. Rentech have 

operated several pilot facilities plus an integrated 

commercial-scale GTL plant. The Pueblo 

Synhytech plant operated with two 6ft diameter 

and 55ft high reactors. Rentech F-T can process 

synthesis gas from gasification of feedstocks 

ranging from natural gas to coal and refinery 

bottoms. Rentech have a joint development 

agreement with Texaco. 

Table 6.2 provides an overview of global 

GTL experiences to date. This table includes 

commercial scale as well as pilot/demonstration 

facilities. 

1955 Sasol 8,000 Sasolburg, South Africa 

1979 Sasol 70,000 Secunda, South Africa 

1982 Sasol 70,000 Secunda, South Africa 

1991 Mossgas 22,500 Mosselbay, South Africa 

1993 Shell 14,700 Bintulu, Malaysia 

Demonstration Facilities 

1990 Syntroleum Tulsa, Oklahoma 

1999 Syntroleum 70 Cherry Point, Washington 

2003 Syntroleum 70 Pt of Catoosa, Oklahoma 

2001 Rentech 360 Arunachal. India 

1993 Rentech 1,000 Denver, Colorado 

2002 ConocoPhillips 400 Ponca City, Oklahoma 

2002 BP 300 Nikiski, Alaska 

1990 ExxonMobil 200 Baton Rouge, Louisiana 

Note: Not all listed demonstration facilities are currently in operation. 


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6 independent 


Products & Performance 

Reactor effluents from F-T synthesis contain 

hydrocarbons ranging from fuel gases and LPGs 

to naphtha, middle distillates to lubricating oil 

and long chained, paraffinic waxes. Further 

upgrading of synthetic oil depends on the 

desired product range. Where middle distillate 

products are preferred (such as for diesel), 

the longer molecules need to be cracked to 

shorter chains. 

Distribution of these different products varies 

with the F-T technology, process conditions and 

subsequent upgrading. For a syngas production 

containing 3.8 mmscfd CO and 10.0 mmscfd 

H 2 (equivalent to the 40MW power generation 

scenario) a possible yield, both without and 

with hydrocracking of heavier components 

is given below. The Chinchilla trials did not 

consider producing a syngas composition for a 

possible GTL application. The syngas produced 

at Chinchilla is slightly rich in H 2 , not typical for 

syngas, and high in CO 2 . It is suspected that the 

significant amounts of H 2 and CO 2 are a result of 

the water-gas-shift (WGS) reaction, which drives 

CO and H 2 O to form H 2 and CO 2 . The ability to 

manipulate the amount of ground water entering 

the cavity during gasification may suppress the 

WGS reaction and result in an improved H 2 ÷CO 

ratio. Adjustments to operating conditions are 

expected to result in a raw syngas with more 

favourable bulk composition, specifically 

H 2 ÷CO ratio. 

GTL plants produce large amounts of by-product 

water and waste heat. Economics of a GTL plant 

may be improved if power and waste heat can be 

integrated with the overall project or exported. 

For larger facilities, the waste heat is considered 

for use to desalinate water. 

TABLE 6.3 GTL Product Distribution (bpd) 

without 

hydrocracking 


with 

hydrocracking 

Fuel Gas / LPG 10 15 

Naphtha 60 100 

Diesel/Kero 160 260 

Lube Oil & Wax 150 5 

Naphtha 

The paraffinic naphtha from GTL is excellent 

cracker feedstock. It provides higher ethylene 

yield than naphtha from petroleum refining. GTL 

naphtha has a lower octane value than petroleum 

naphtha, would require conversion to improve 

octane and thus has a lower value as a 

transport fuel. 

Diesel 

Over the next decades, Australian and 

international specifications for transportation 

fuels will continue to be tightened. GTL 

diesel with its high cetane number and being 

essentially sulphur-free and low aromatic 

will have a relatively high market value. 

Base Oils & Waxes 

GTL lubricants and paraffinic waxes are high 

quality and feed niche markets. Current value of 

these products is high and certain technologies 

are geared to yield higher amounts of lubricants 

and waxes. However, this is a relatively small 

market and with a number of world scale GTL 

facilities coming on stream over the next years, 

the value of these products may not be as stable 

as that of naphtha and middle distillates. 

Water 

As is detailed in Section 6.6.3.1, a principal 

by-product from GTL conversion is water. In 

certain natural gas fed facilities that are being 

planned for desert environment, this water is 

treated and then used for cooling tower make 

up and irrigation. 

Fuel Gas 

Off gas from F-T and upgrading is used to 

generate steam and power. 


As described above, GTL diesel has superior 

environmental performance compared to 

conventional diesel, giving significant reduction 

in emissions of particulates, NOx, SOx, carbon 

monoxide, and light hydrocarbons. 

Emissions from the plant are primarily 

• bio-degradable residue from water treatment 

• spent catalyst, generally sent back to supplier 

• cooling tower vapour plume 

• stack emissions from small fired heaters 

6.6.5 Economics 

Typical estimates indicate GTL projects are 

commercial at oil prices above US$25 per 

barrel, based on stranded gas or equivalent. 

The projects currently being implemented are 

generally large to mega scale (from several 

hundred million dollar to multi billion dollar) 

and involve multiple stake holders: these 

projects take a long time (48+ months) 

to implement. 

Capital cost estimates for natural gas based 

GTL plants are in the range of US$20,000 

to US$40,000 per daily barrel produced. 

Approximately 40% of this is for F-T and 

upgrading, 25 to 35% for clean up and 25 to 

35% for gasification. The specifications required 

and the technologies selected play a significant 

role in determining the cost break down. 

Demonstration size units fall outside the 

range to directly extrapolate costs. 

Significant investments have been made 

in developing lower cost syngas units (eg. 

gasification, partial oxidation), which has helped 

bring down capex and improve economics of 

projects currently in design or planning. Also, 

the learning curve from the current second 

generation facilities, in engineering, fabrication 

and construction, will substantially reduce 

project costs. 

6.6.6 Fabrication & Construction 

Equipment in the F-T synthesis and upgrading 

sections are generally at medium pressure 

(up to about 50 bar) and temperature (up to 

400°C) levels and are constructed of materials 

commonly used in hydrocarbon processing 

industries. Fabrication of the F-T reactor, and 

possibly of certain upgrading equipment, may 

be proprietary.

To ensure correct technology selection and 

optimum plant efficiency, larger GTL projects 

are typically divided into the following phases: 

• technology selection and basic design 

• front end engineering design (FEED) 

• engineering, procurement and construction 

Depending on contracting strategies, bid 

durations, etc, the first two phases generally 

have a combined schedule 18+ months. 

Schedule for the engineering, procurement 

and construction phase for larger GTL projects 

will be 30+ months, for an overall schedule 

of 48+ months. 

The choice of construction method, such as 

stick building or modular design, needs to be 

established relatively early in the project. For the 

Chinchilla site, modular design will be favoured 

to minimize on-site labour requirements. 

Larger capacity GTL units will have limited 

opportunities for modularization due to 

equipment sizes. An early modularization 

study is recommended as part of the 

construction strategy. 


Gas-to-Liquids through Fischer-Tropsch 

synthesis, from coal or natural gas, is a well 

established process for the production of 

transportation fuels, petrochemical feedstock, 

base oils and specialty waxes. The process is 

used on a commercial scale in South Africa by 

Sasol and Mossgas and in Malaysia by Shell 

and the major F-T technology providers have 

been operating pilot plants for extended periods. 

Several next-generation GTL facilities are either 

under construction, in the design phase or are 

in the planning stage. They are being developed 

by most of the major oil corporations and a 

few specialist technology companies that have 

already committed significant resources to the 

implementation of these projects. 

A 20,000 to 24,000 bpd GTL facility is under 

consideration by Linc Energy, which is in 

line with a commercial scale UCG facility. A 

significant expansion in gasifier requirements 

would be required in comparison to that required 

for a 40MWe facility. The risk of upset to syngas 

quality and consistency will be reduced due to 

the increased number of gasifiers operating 

in parallel. 

The majority of GTL facilities are oxygen blown, 

although Syntroleum has GTL experience with 

air blown gasification, at pilot plant scale. 

The proposed technology for the Sweetwater 

GTL project in Western Australia was based 

on Syntroleum’s technology and this project 

went through to the basic design stage of 

development, before it was terminated. 

Linc Energy has entered into a Memorandum of 

Agreement with Syntroleum relating to GTL. We 

understand that the Memorandum of Agreement 

is to be summarized in the Prospectus to which 

this report is to be attached. 

F-T processes produce high quality diesel 

automotive fuel and naphtha for petrochemical 

use that has large global markets. The market 

risks for GTL products are therefore considered 

very limited. 

Key success factors for GTL developments are: 

• mid-long term availability of low 

cost feedstock 

• low cost generation of synthesis gas 

• access to proven F-T technology 

6.7. Conclusion 

The scope of this report was to perform a 

technical due diligence into the feasibility of 

coupling an Underground Coal Gasification 

(UCG) facility with a 30 to 40MW Gas Turbine 

Generator (GTG) or a Gas to Liquids (GTL) 

unit using Fischer-Tropsch technology. These 

options have been selected by Linc Energy to 

enable them to extract value from a coal resource 

while utilizing their experience and know how in 

UCG technology. 

In order to assess the feasibility, the 

analysis was broken down into the following 

four sections. 

• UCG to produce raw syngas, 

• Clean up of the raw syngas to produce a 

clean syngas for a 30 to 40MW GTG or 

GTL Facility, 

• 30 to 40MW GTG with clean syngas 

as fuel and 

• GTL facility using clean syngas as feedstock. 

The sections were broken down in this way 

because each is essentially independent from the 

other, with the common element being syngas 

as either a feedstock (syngas clean up, GTG and 

GTL) or a product (Syngas clean up and UCG). 

In each case, the history and recent 

developments of the technology were reviewed 

to identify historical precedents that may give 

some indication of the likely success of the 

technology in future. Secondly, the technology 

itself was discussed to identify barriers to the 

successful application of the technology in the 

proposed configuration. The environmental 

impact of each Section was discussed to 

determine if there might be any regulatory 

barriers to the application of the technology 

as proposed. Finally, possible construction 

schedules have been discussed to give an 

approximate indication of the likely timing 

for a future project. 

Underground Coal Gasification 

Due to the commercial sensitivity of the 

technology used by Linc Energy, the scope of 

this review is mainly limited to publicly available 

information and visits to the site by Shedden 

Uhde personnel. However, the proposed 

technology of UCG should be technically 

feasible. Linc Energy have reported that at 

Chinchilla, they operated the largest and longest 

UCG trial in the Western World with 30 months 

of operating experience and high product gas 

availability. Linc Energy has advised us that they 

will draw upon the substantial UCG experience 

in the former Soviet Union via Dr. Michael 

Blinderman and his team. 

The most sensitive technical issue is the 

potential for ground water contamination. In 

this regard, there has been no substantial 

contamination of the underground water detected 

to date. One result, however, did identify benzene 

levels in well M5, at higher than background 

levels. Linc Energy has indicated that this well 

has been connected to the cavity in the course 

of operation and represents a periphery of 

the gasifier. 


.72 

6 independent 


Surface subsidence is expected from any UCG 

operation but with planning and appropriate 

surveying of the proposed site, this risk also 

appears manageable. 

A detailed monitoring program may need to 

be set up in future larger scale operations to 

demonstrate the ability of UCG to meet the 

product specifications required for a GTL unit. 

Linc Energy indicated that this will be part of 

their expansion plan for the gas field. At this 

stage, there is no reason to believe that syngas 

from UCG will not be capable of meeting the 

required specifications. 

Syngas Clean Up 

There is significant and well-established 

industry experience with the combination 

of surface gasification with either power 

generation (via GTG) or GTL. This experience 

and technology can be readily applied to UCG. 

In recent IGCC projects, the typical clean up 

steps for syngas to GTGs include: 

• particulate removal by wet scrubbing or 

filtration, followed by 

• sulphur removal with a chemical (amine) or 

physical solvent (Rectisol, Selexol). 

• If mercury concentrations in the coal are 

sufficiently high, this may be followed by 

a mercury removal step. 

If necessary to further reduce total sulphur 

or greenhouse gas emissions, the following 

steps could be added, using proven 

industry technology: 

• COS hydrolysis (sulphur reduction) 

• CO to H shift and CO capture 

2 2 

(greenhouse gas reduction) 

Due to the inherent flexibility of gasification and 

its elevated operating pressure, a future UCG 

project will be better positioned for changes in 

the regulatory environment, than an equivalent 

conventional coal fired power station. 


The experience of more than fifty years of 

treating similar syngas suggests that there 

are technical solutions for treating all likely 

contaminants in the syngas. Cleanup steps 

typically employed for F-T process from coal 

gasification include particulate removal by wet 

scrubbing followed by acid gas removal 

with Rectisol. 

At this stage, trace components in the syngas 

from the Chinchilla UCG trial have not been 

sufficiently identified to allow a complete 

specification for a GTL facility. Further 

investigation will be needed in subsequent 

project phases to establish expected trace 

component concentrations. However, UCG 

syngas clean-up is expected to be able to 

successfully meet specifications of 

upstream processes. 

30 to 40MW Power Generation Unit 

Gas to power generation is an established 

technology proven in syngas service 

applications. Several turbine vendors have 

experience in supplying units for applications 

similar to that proposed by Linc Energy. 

Therefore, the firing of the syngas in a 

modified gas turbine is well proven and 

technically feasible. 

Gas turbines suited to syngas applications have 

basic technical and functional requirements that 

differ to natural gas applications. One of the key 

technical issues of the Chinchilla syngas is its 

low calorific value. In order to achieve efficient 

and reliable operation, modifications primarily 

to the combustion and fuel system but also 

to the special fire protection, packaging and 

controls need to be incorporated into the GT 

design. Several gas turbines have been modified 

to fire on similar gas streams although vendor 

consultation is important in ensuring the GT 

meets the process requirements. GE Power has 

submitted a proposal to Linc Energy in which 

they detail a GE turbine that is suited to operate 

on the low calorific value UCG syngas produced 


The quality and consistency of the syngas is 

an important parameter for the GT operation. 

As the Chinchilla UCG process is going to be 

further developed into a significant number of 

gasifiers, the risk of upset to syngas quality and 

consistency will be reduced. 

The main advantage of syngas from above 

and under ground gasification as feedstock for 

power generation, in opposition to solid coal, 

is that syngas can be used as feedstock for 

gas turbines allowing the combination of gas 

and steam cycles into combined cycles. The 

higher efficiency achieved by combined cycles 

compared to coal fired power stations not only 

means higher returns on investment but also 

lower greenhouse gas emissions. 

The Queensland EPA needs to be consulted 

with respect to the emission requirements. No 

barriers, in terms of meeting these requirements 

are anticipated. 

An additional advantage of syngas fired turbines 

is that they typically require natural gas or 

distillate as a startup fuel and are thus dual fuel 

capable. This allows switching from one fuel to 

another, or co-firing both fuels, while running 

under load. Backup fuel can be fired when 

syngas is limited or when there is an opportunity 

to respond to spot market demand. 

Gas to Liquids (GTL) 

Gas to Liquids through Fischer-Tropsch 

synthesis is an established technology, with 

a number of commercial facilities around the 

world operating on syngas from coal or natural 

gas. Major products from the process include 

transportation fuels, petrochemical feedstock, 

base oils and specialty waxes, which have a high 

value and are easily marketed. 

The majority of GTL facilities are oxygen blown, 

although Syntroleum has GTL experience with 

air blown gasification, at demonstration plant 

scale. Linc Energy has recently negotiated an 

MOA with Syntroleum.

The gas composition from the Chinchilla UCG 

trials is not ideal, however it is acknowledged 

that the gasifier was operated to produce a 

combustible syngas for power generation 

rather than one for a GTL facility. From a GTL 

perspective, the syngas produced at Chinchilla 

is slightly rich in H 2 and high in CO 2 . It is 

suspected that the significant amounts of H 2 and 

CO 2 are a result of the water-gas-shift (WGS) 

reaction. The ability to manipulate the amount 

of ground water entering the cavity during 

gasification may suppress the WGS reaction and 

result in an improved H 2 ÷CO ratio more suited 

to GTL production. It is believed this avenue will 

be pursued by Linc Energy and its UCG partner 

Ergo Exergy technology. 

A 20,000 to 24,000 bpd GTL facility is part of 

Linc Energy’s long-term business plan which 

is in line with a commercial scale UCG facility. 

A significant expansion in gasifier requirements 

would be required in comparison to that 

required for a 40MWe facility. The risk of 

upset to syngas quality and consistency will 

be reduced due to the increased number of 

gasifiers operating in parallel. Expansion of 

the UCG field will therefore have a positive 

impact on the operation. 

It is understood that Linc Energy has been and 

will continue to run trials to demonstrate the 

ability to reliably produce a more optimal 

syngas composition suited to a GTL process. 

6.8. Suggestions for Overall 

Project Success 

In addition to the issues identified earlier in 

this report, the following items are offered 

as suggestions to aid in the delivery of a 

successful project in the future. 

The achievement of major project facilitation 

(MPF) status is required to streamline project 

implementation and approvals. Although Linc 

Energy’s gasification project has already been 

granted the “Project of State Significance” 

status by the Queensland Government, it 

would be expected to be extended onto the 

GTL project in the future. 

The EPA needs to carry out an environmental 

impact assessment (EIA) of the proposed 

process. To ensure that the requirements of the 

EIA are met, the project owner should ensure that 

potential environmental impacts and constraints 

are identified early in the planning and design, 

and that adequate time and resources are 

devoted to carrying out environmental surveys. 

Construction issues, including aspects such 

as negotiation with trade unions, are key to 

the success of the project. 

Although Linc Energy has been acquiring several 

EPCs in Queensland during 2004 and 2005, 

coal reserves, dependent on the desired size of 

the GTG and GTL facility, needs to be addressed 

in order to ensure sufficient availability of 

feedstock. For more information on Linc Energy’s 

coal resources refer to the geological report. 

Appropriate process and power industry 

standards should be adhered to during the 

design, engineering and construction phases 

of the project. 

FOOTNOTES 

1. The mass of coal gasified as referred to in this 

document refers to the coal that is converted to 

syngas by the process of both gasification and 

pyrolysis. The generic term gasified as used in 

this context is used for simplicity. 

2. Tests were carried out for the following components: 

Major Ions and pH, phenolic compounds, 

polyaromatic hydrocarbons (PAHs) and 

BTEX compounds. 


.74 

6 independent 

REFERENCES 

BHP Billiton: (primary researchers: Wibberly, L. 

& Cottrell, A.) December 2002. Case study 

B20 - Electricity Production Using Underground 

Coal Gasification. 

Blinderman, M. & Fidler, S. 2003. Groundwater at 

the Underground Coal Gasification Site at Chinchilla, 

Australia. Proceedings of the Water in Mining 

Conference, Brisbane, QLD, 13-15 October 2003. 

Blinderman, M. & Spero, C. April 2002. UCG 

in Australia, Development to Date and 

Future Opportunities. 

Blinderman, M. & Spero, C. 2002. Chinchilla 

Underground Coal Gasification, Controlled 

Shutdown Procedure prepared for EPA. Report 

revision 02, 26 April 2002 

Blinderman, M. S. & Jones, R.M. October 2002. 

The Chinchilla IGCC Project to Date: UCG & 

Environment. Paper to the 2002 Gasification 

Technologies Conference, San Francisco, USA, 

October 27-30, 2002. 

Blinderman, M.S. Walker, L.K. & Brun, K. October 

2001. An IGCC Project at Chinchilla, Australia 

Based on UCG. Paper to 2001 Gasification 

Technologies Conference, San Francisco. 

Creedy, D.P. and Garner, K. 2001. Review 

of Underground Coal Gasification 

Technological Advancements. 

Dossey, J.L. 1976. Underground Coal 

Gasification Technology in the USSR. 



Edmar Luiz Fagundes de Almeida, Fabrício Brollo 

Dunham, José Vitor Bomtempo, Ronaldo Goulard 

Bicalho. The Renewal of the Gas-to-Liquids 

Technology: Perspectives & Impacts. 

Emission Regulations Queensland www.energy.qld. 

gov.au/infosite/emissionregulations.html 

ENEA, Italy. Fraunhofer ISI, Germany. Ris National 

Laboratory, Denmark. January 2005. Hypogen Pre- 

Feasibility Study Final Report - A study commissioned 

and guided by the European Commission, DG Joint 

Research Centre Institute for Energy and Institute 

for Prospective Technological Studies. 

Fleisch, T. H. Sills, R. A. & Briscoe, M. D. April 2002. 

Emergence of the Gas-to-Liquids Industry: a Review 

of Global GTL Developments . 

Gaffney, Cline & Associates. May 2001. Review of 

Gas to Liquids Industry for Australia Prepared for The 

Department of Industry Science & Resources (DISR). 

GE Power Gas Turbine and Combined Cycle 

Products Catalogue. 

GE Power Systems 1999. IGCC, An environmentally 

compliant solution for low cost fuel. 

GE Power Systems October 2001. Preliminary 

Equipment & Services Technical Document for 

One PG 6581B GTG Unit to Linc Energy. 

GE Power Systems Specification for Fuel Gases for 

Fuel Gases for Combustion in Heavy-Duty Gas 

Turbines January 2002. 

Golder Associates Pty Ltd. May 2005. Draft Report 

on Environmental Performance of Underground Coal 

Gasification , 05632045 Draft 2. 

Green, D.L. November 1999. An Assessment of 

Energy and Environmental Issues Related to the Use 

of Gas-to-Liquid Fuels in Transportation, Prepared 

by the Oak Ridge National Laboratory for the U.S. 

Department of Energy. 

Green, M. 2005. Basic Concepts of Underground 

Coal Gasification. Available at: http://www.coal-ucg. 

com/concept.html 

Holland, M.L. Managing Equipment Integrity in a 

CO-CO 2 -H 2 0 Stress Corrosion Cracking Environment. 

Jones, R. M. & Shilling, N. Z. GE Power Systems 

- IGCC Gas Turbines for Refinery Applications. 

Parsons Infrastructure & Technology Group. (Principal 

Investigators Klett, M. G. Maxwell, R.C.& Rutkowski, 

M.D. September 2002. The Cost of Mercury Removal 

in an IGCC Plant. 

Rojey, A. & Chabrelie, M-F. 2003. LNG Export 

Projects: Steps Towards Unit-Cost Reduction 

SFA Pacific Engineering & Economic Consultants. 

Korens, N. Simbeck, D.R. & Wilhelm, D.J. December 

2002. Process Screening Analysis of Alternative Gas 

Treating & Sulphur Removal for Gasification. 

Shedden Uhde April 2001. UCG Gas Clean Up Plant 

Design & Costing Study for Linc Energy. 

Technologies Initiatives Ltd. 2001. UK Process Plant 

Capability Gas to Liquids (GTL) Conversion, Prepared 

for Oil and Gas Industry Development, Department of 

Trade & Industry UK. 

UOP LLC, Prepared by Corvini, G. Stiltner, J & Clark, 

K. 2002. Mercury Removal from Natural Gas & 

Liquid Streams. 

van der Laan, G.P. 1999. Kinetics, Selectivity 

and Scale Up of the Fischer-Tropsch Synthesis.

DISCLAIMER 

Neither the report nor any part of the report shall be provided to third parties except as provided for herein. This report was prepared under terms and conditions which limit 

Shedden Uhde Australia Pty Ltd’s liability and contain other important limitations. Shedden Uhde accepts no liability to any third party recipient of this report. The report 

may not be relied upon by third parties and third party use is subject to the terms and conditions of Shedden Uhde Australia Pty Ltd’s arrangement with Linc Energy Ltd. 

Those limitations apply to all recipients in possession of this report. Possession of the report does not carry with it the right of publication. 

Shedden Uhde Australia Pty Ltd. conducted this analysis and prepared this report utilising reasonable care and skill in applying methods of analysis consistent with normal 

industry practice. All results are based on information available at the time of review. Changes in factors upon which the review is based could affect the results. Forecasts 

are inherently uncertain because of events or combinations of events that cannot be foreseen including the actions of government, individuals, third parties and competitors. 

NO IMPLIED WARRANTY OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE SHALL APPLY. 

Some of the information on which this report has been based has been provided by others including Linc Energy Ltd. Shedden Uhde Australia Pty Ltd. has utilised such 

information without verification unless specifically noted otherwise. Shedden Uhde Australia Pty Ltd. accepts no liability for errors or inaccuracies in information 

provided by others. 

Shedden Uhde Australia Pty Ltd has given its written consent to the issue of this report in the form and in the context in which it appears and extracts from that report in a 

Prospectus issued by Linc Energy to be dated on or about 9 March 2006 and to be named in the Prospectus as the independent technology expert in the form and in the 

context in which it is so named. Shedden Uhde Australia Pty Ltd has been involved only in the preparation of this report and has not been involved in the preparation of any 

other part of the Prospectus and specifically disclaims liability to any person in respect to any statements included elsewhere in the Prospectus. Shedden Uhde Australia Pty 

Ltd has not, other than as set out above, been involved in the preparation of or caused the issue of the Prospectus. 

Graeme Cox 

Technical Manager 

Shedden Uhde Australia Pty Ltd 


.76 

7 independent 


environmental report

7. . Introduction 

Coal gasification is the process in which coal 

is reacted with steam and air or oxygen under 

high temperature to form a combustible gaseous 

mixture. Gasification has long been used to 

produce fuels and chemical feedstock, and a 

significant number of gasifiers are in use today 

to provide these products to refineries and 

chemical plants. The use of coal gasification 

products as a fuel for electricity production is 

an area of active research and development, 

because of the efficiency and environmental 

benefits of gasification based plants when 

compared to conventional coal-combustion 

based power generation. 

Underground coal gasification (UCG) is a 

process whereby the coal is gasified in situ, 

without the need to first mine the coal and then 

transport it to a purpose built surface gasifier. 

Apart from the benefits derived from not having 

to mine and transport the coal, UCG requires 

much less capital since no surface gasification 

reactor is needed for the process. The process 

has been used for electricity generation in 

commercial-size projects in the former Soviet 

Union for more than 40 years, while significant 

ongoing national research programs have been 

undertaken in the United States and Western 

Europe. So far UCG activities in the Western 

world have not resulted in a commercial 

development. 

The following document provides a summary 

of a review carried out by Golder Associates 

of environmental performance of UCG, based 

on results from the Linc Energy project at 

Chinchilla, and available information on other 

UCG trials and full scale operations throughout 

the world. 

Golder Associates have provided ongoing 

professional environmental monitoring 

services to the Chinchilla project since 1999. 

7.2. Underground Coal 

Gasification Process 

The UCG process is initiated by drilling at least 

two boreholes (or process wells) into the virgin 

coal seam. A connection between the wells 

must be created within the coal seam, in order 

to allow circulation of an oxidant and gas from 

the injection well, through the coal and into the 

production well. Once a connection between 

wells is created, the coal seam is ignited and an 

oxidant (air or oxygen in various mixtures) is 

injected through one or several wells (injection 

wells). The oxidant reacts with coal and 

groundwater to form a combustible gas. The 

calorific value of the UCG gas is about 1/7 to 1/3 

that of natural gas, depending primarily on the 

oxidant used. The gas produced at the surface 

is cooled, and the condensable components 

(water and organic liquids) are separated for 

further processing and use or disposal. The gas 

itself can then be used for power generation or 

chemical processing. 

The system is expanded by drilling and 

connecting further process wells. As the 

gasification progresses and coal between 

the process wells is consumed in chemical 

reactions and converted into gas, the roof of 

coal seam eventually collapses and caves. 

The cavity behind the active portion of the 

gasifier is partially filled with rubble and ash 

or slag as the roof caves, and the surface 

above the cavity subsides as a result of the 

overburden deformation. 

7.3. Environmental Benefits 

of Coal Gasification 

Coal gasification is a well proven technology 

that has been used historically for production of 

coal gas for urban areas, for the production of 

liquid fuels and chemicals, and more recently 

for electricity generation in large scale integrated 

gasification combined cycle (IGCC) plants. 

The number of operating IGCC plants is 

currently small, however the US Department 

of Energy National Engineering Technology 

Laboratory (2002) report that at least 163 

commercial gasification plants are in operation, 

under construction, or in planning and design 

stages. IGCC technology has not been widely 

adopted to date because of high capital costs 

and low fuel costs ACARP, (2001a), however 

it is now being considered more seriously 

because of the efficiency of IGCC plants and 

its environmental benefits when compared to 

conventional coal-combustion based power 

generation. ACARP, (2001a), in a comparison of 

greenhouse gas emissions (GGE) from a range 

of power generation technologies conclude 

that IGCC is one of the most energy efficient 

coal-based processes, with projected GGE of 

approximately 20% less than the most efficient 

Australian coal-fired power station. Projected 

SOx emissions and water consumption were 

also significantly less than for conventional 

coal-fired power stations. 

Environmental monitoring at four commercial 

IGCC plants in the US has indicated the 

following (US Department of Energy National 

Engineering Technology Laboratory, 2002): 

• the plants have achieved the lowest levels 

of so-called criteria pollutant air emissions 

(NOx , SOx, CO and particulates) of any 

coal-fuelled power plants in the world; 

• emissions of trace inorganic and organic 

hazardous air pollutants are comparable 

to those from coal-combustion based 

plants that use advanced air emission 

control technologies; 

• slag produced by gasifiers operated at 

temperatures higher than the ash fusion 

temperature is “highly non-leachable”; 

• CO 2 emissions are at least 10% less than 

for coal-combustion based plants, for an 

equivalent net production of electricity; and, 

• discharge of wastewater is approximately 50% 

less than for coal-combustion based plants. 


.78 

7 

independent environmental report (cont) 

As an alternative to IGCC plants with surface 

gasifiers, underground coal gasification can 

be combined with combined cycle plants in a 

similar manner (UCG-IGCC power plant). The 

advantages of operating a large underground 

gasifier as opposed to a surface gasifier include 

the following (Blinderman and Fidler, 2003): 

• The supply of coal and water to the gasifier 

does not require construction and operation 

of additional infrastructure – both are 

available in the underground coal seam. The 

capacity of a surface gasifier will be limited 

both by the rate of supply of coal by the 

available transport infrastructure and by the 

size of the surface gasifier reactor. In the case 

of an underground gasifier, the supply of coal 

is not a limiting factor in the capacity of 

the system. 

• The UCG process creates a very large 

underground gas and heat storage capacity, 

which makes the gas supply very stable 

and robust. 

• An underground gasifier is generally made 

up of a number of underground reactors with 

largely independent outputs. The gas streams 

from different reactors can be blended as 

required to ensure consistency of overall gas 

quality. The outputs of reactors can be varied 

in order to optimise coal extraction and gas 

supply from the entire gasifier. 

• No ash or slag removal and handling are 

necessary since they predominantly stay 

behind in the underground cavities. 

Additionally, unlike conventional gasification 

methods, UCG is not only a method of coal 

conversion; it is also a method of extracting coal 

from the underground seams. As a coal recovery 

method, UCG supplements conventional mining 

by being capable of utilising coal seams, which 

are impossible or uneconomical to mine by 

conventional mining methods. 


ACARP (2001b) compares projected GGE 

for UCG-IGCC with other power generation 

technologies, based on the composition of 

the product gas from the Chinchilla UCG trial. 

Projected GGE for UCG-IGCC are slightly less 

than for conventional IGCC, and around 25% 

less than for the most efficient Australian coalfired 

power stations. Projected NOx emissions 

are comparable to other combined cycle type 

power stations. Projected SOx emissions are 

significantly less than for conventional coal-fired 

power stations, if H 2 S scrubbing is incorporated 

in the process. Water consumption is lower 

than for other combined cycle technologies, and 

significantly lower than for conventional coalfired 

power stations. 

For both conventional IGCC and UCG-IGCC, 

the lower GGE result from the higher efficiency 

of the combined cycle technology. In addition, 

removal of CO 2 and other impurities from the 

high pressure gas stream in IGCC processes can 

be achieved more efficiently than for the large 

volumes of low pressure flue gas from a boiler 

in a conventional coal-fired plant. The relative 

efficiency with which the high pressure gas can 

be cleaned up offers the potential for additional 

reductions in greenhouse gas emissions through 

carbon sequestration. 

In summary: 

• Coal gasification (either surface gasification 

or UCG) provides the opportunity to use 

combined cycle electricity generation 

technology, which is significantly more 

efficient than conventional coal fired power 

stations, therefore resulting in lower GGE. In 

addition, combined cycle technology can be 

operated to more efficiently remove CO 2 and 

other impurities. 

• UCG does not require the construction 

of surface mining and transportation 

infrastructure, and thus has a lower capital 

cost than surface gasification. It also allows 

conversion of coal resources that could not 

be economically mined using conventional 

mining methods. 

7.4. Potential Environmental 

Impacts from UCG operations 

As with any other industrial process, there is the 

potential for a UCG operation to cause adverse 

environmental impacts if it is not properly 

managed. This section provides a discussion 

on the general environmental impacts which 

could potentially develop as a result of a 

UCG operation, and the general approach to 

managing these impacts. 

7.4. Groundwater Impacts 

Water plays an important role in the chemical 

reactions that lead to gas production in UCG. 

Most of the process water required for chemical 

reactions is usually derived from groundwater 

in the coal seam itself. Control of groundwater 

inflow to the UCG gasifier is important in 

controlling the UCG process, as the quality of 

the product gas is affected if there is insufficient 

water, or if the gasifier is cooled by excessive 

groundwater inflows. 

In addition to consuming large quantities of 

groundwater (which has the potential to impact 

on the quantity of water available for other 

users), the UCG process has the potential to 

contaminate groundwater, both during the 

process and beyond the active life of a gasifier. 

During operations, groundwater contamination 

can occur if product gas is forced into the 

formation and condenses, leaving behind 

pure phase hydrocarbons which can then 

dissolve into groundwater. In the longer term, 

hydrocarbons and the solid residue remaining in 

the gasifier have the potential to leach chemicals 

into the groundwater. 

During operation, the potential to contaminate 

groundwater can be limited by maintaining 

the gas pressure within the gasifier below the 

hydrostatic pressure of water in the coal seam 

and surrounding strata, thus creating a positive 

groundwater flow directed towards the gasifier. 

This is the mode of operation that was adopted at 

the Chinchilla site (see discussion below). Other 

UCG trials such as the Hoe Creek (Humenick, 

1983) and Carbon County (USEPA, 1999) sites 

were not operated in this manner, resulting in 

significant groundwater contamination.

At the completion of gasification, residual 

condensate and solid residue will remain in 

the areas where gasification has taken place. 

Experience at the Chinchilla site has indicated 

that flushing of the gasifier after completion 

of gasification by maintaining the inward 

groundwater flow has the potential to reduce the 

concentrations of hydrocarbon contaminants 

over time. No information is available from 

Chinchilla or from other operations regarding 

the concentrations of metals or other trace 

elements that may leach from the solid residue. 

Little information is available on the long term 

concentrations of contaminants in large scale 

gasifiers. Dvornikova (1994) indicates that 

for large scale gasifiers in the former Soviet 

Union, concentrations of phenols during and 

after gasification are only slightly higher than 

the baseline values and tend to return to the 

baseline levels over 3 – 5 years after the end 

of gasification. At some point, as the active 

gasification zone moves further from a particular 

previously gasified area, groundwater flow in 

that area may return to the direction dictated by 

regional groundwater conditions. If flushing of 

these areas is not sufficient prior to that point, 

it would be necessary to either undertake in situ 

cleanup of groundwater, or to remove water from 

this area by pumping and treating it on surface. 

7.4.2 Surface Impacts from 

Process Water 

The water that is removed from the gasifier 

during operation and during controlled 

shut-down and post-gasification flushing 

will contain potentially high levels of dissolved 

hydrocarbons. Water that is separated from 

the gas during operation or directly removed 

from the gasifier during post-gasification 

venting/flushing must be stored, and eventually 

treated. In general, the environmental impact of 

contaminated water that is collected at surface 

during gasification or during post-gasification 

venting/flushing can be controlled by lining 

evaporation ponds with a low 

permeability barrier. 

7.4.3 Subsidence 

In general terms, subsidence over the void 

created by a UCG operation has the potential 

to cause two kinds of impacts: 

. disruption to surface infrastructure as a 

result of surface settlement; and 

2. disruption to the integrity of the overburden, 

leading to leakage of gas into the overburden 

and potentially into aquifers overlying the 

coal seam or to the atmosphere. 

Development of gasifiers can be managed 

to avoid sensitive surface infrastructure. 

Subsidence that causes disruption to the 

integrity of the overburden has the potential to 

cause significant groundwater contamination 

and loss of product gas, and to severely impact 

on the ability to control the UCG process. 

The amount of surface subsidence, and the 

potential for leakage of product gas into the 

overburden or overlying aquifers will depend on 

the depth and thickness of the coal seam, and 

the geotechnical properties of the overburden 

materials. Effective control of environmental 

impacts as a result of subsidence requires a 

detailed geotechnical characterisation of the 

area to be gasified, and avoidance of areas 

which do not have favourable geotechnical 

conditions. In addition to detailed geotechnical 

characterisation in advance of gasification, 

subsidence monitoring and monitoring of 

the extent of caving in the roof of the gasifier 

should be carried out during gasification to 

verify theoretical predictions. Linc Energy has 

undertaken characterization of the rock behaviour 

of the overburden as well as subsidence 

monitoring since the beginning of the project. 

This approach is expected to continue during 

expansion of operations. 

7.5. The Linc Energy Chinchilla 

UCG Project 

7.5. Overview of Operations 

Gasification at the Linc Energy Chinchilla site 

commenced in December 1999. Approximately 

32,000 metric tonnes of coal have been gasified 

to date, and 100% availability of gas production 

was demonstrated over 30 months of operation. 

The UCG operation in Chinchilla is by far the 

largest and the longest ever in the Western 

World. The process displayed high efficiency 

and consistency in providing gas of stable 

quality and quantity, and the cost of the UCG gas 

produced proved to be comparable (on a per unit 

of energy basis) with the very low cost of thermal 

coal in the Australian market. Gasification 

technology for the trial was licensed from Ergo 

Exergy. Groundwater protection and monitoring 

systems for the trial were also designed by 

Ergo Exergy. 

In late 2001, the decision was taken to shutdown 

the operation at Chinchilla in a controlled 

manner, and implement a program of ongoing 

monitoring at the site. The gasifier is currently 

in preparation for restoration of gas production. 

The site will then be further developed to feed 

the gas into a Gas-to-Liquid plant to produce 

diesel fuel via Fischer-Tropsch technology. 

Throughout the period of operation, the gasifier 

was operated such that pressure within the 

gasifier generally remained below the pore 

pressure of the groundwater in the surrounding 

coal aquifer. As such, groundwater flow will have 

locally been towards the gasifier, and product 

gas will have generally been contained within 

the gasifier. The controlled shut-down procedure 

was designed to decrease pressure within the 

gasifier, and thus enhance groundwater flow 

towards the gasifier. 

Groundwater monitoring and testing commenced 

several months prior to commencement of 

gasification, and has been carried out at 

various intervals since that time. 


.80 

7 

independent environmental report (cont) 

7.5.2 Groundwater at the 

Chinchilla Site 

At the site, the thickness of the target coal seam 

is approximately 10m, and the roof of the seam 

is located from 120m to 125m below surface. 

The coal seam forms a part of a geological unit 

known as the Injune Creek Group. This group 

provides limited water supply of fair to poor 

quality, from sandstone layers and from coal 

seams. Water supplied from aquifers in the 

Injune Creek Group is used for stock watering. 

Permeability measurements in the target 

coal seam indicate that it is generally of low 

permeability. Results of groundwater monitoring 

to date are consistent with pre-existing results of 

regional monitoring contained in the Queensland 

Department of Natural Resources and Mines 

groundwater database. Groundwater quality 

at the Chinchilla site is generally poor. The 

elevated concentrations of total dissolved 

solids render the groundwater unsuitable for 

use as drinking water, however it is marginally 

suitable for use in livestock watering. The limited 

potential for beneficial use of groundwater in 

the target coal seam limits the potential for 

UCG operations to adversely affect other 

groundwater users. 

The nature of the geology suggests that there is 

no direct hydraulic connection between the coal 

seam and the near surface alluvium, or the coal 

seam and deeper aquifers, due to intervening 

layers of siltstone and mudstone. 

7.5.3 Groundwater Monitoring Program 

Monitoring of groundwater quality has been 

carried out at the Chinchilla UCG site since mid- 

1999, at a total of thirteen locations. Monitoring 

bores have all been installed in the target coal 

seam. Monitoring was carried out in two zones: 

• an inner zone within 300m radius of the 

centroid of the process area. A total of five 

monitoring bores are located within the inner 

zone, including two bores which were sealed 

prior to the commencement of gasification. 

• an outer zone, in which 7 monitoring wells 

are located at minimum distances of between 

350m and 1750m from the process well area. 


Of particular interest in the inner zone is 

monitoring bore M5, which is located at 200 

m from the process well area at the closest 

point. This well demonstrated close hydraulic 

connection to the initial process wells (L14, L15, 

L16) even prior to beginning of gasification. This 

connection was evidenced by significant rates of 

air production from M5 during so-called cold air 

testing in August 1999 (M. Blinderman, personal 

communication). In this process, air was 

injected into one of the future process wells, and 

the rates of flow produced from other process 

wells were monitored. It was observed that 

considerable proportion of the air was produced 

from M5 rather than other open holes in a much 

closer proximity to the injection well, indicating 

the presence of a relatively high permeability 

structure between M5 and the process well area. 

Continuous venting of water and gas from M5 

during the first nine months of the Chinchilla 

operation will have locally depressurised the 

aquifer, and thus potentially allowed incursions 

of gas from the gasifier towards M5, along 

the high permeability structure. Analyses of 

gas from M5 during the venting period are 

understood to have indicated the presence of 

product gas. As a result, groundwater in the 

vicinity of M5 will have been directly impacted 

by gasification. Following this period, M5 was 

sealed at surface with a valve, which was only 

opened for groundwater monitoring. 

In addition to the monitoring carried out 

throughout the production and controlled 

shut-down phases of the project with the system 

described above, samples were collected from a 

process well, L22, which was installed as part of 

the process approximately 1 month in advance 

of the commencement of the controlled shutdown. 

During this month, the well was used 

as an injection well only. The well is located at 

the extreme down-dip end of the process well 

area, and thus groundwater flow into the gasifier 

cavity collects at this end of the cavity. 

7.5.4 Summary of Groundwater 

Monitoring Results 

Results of groundwater pressure monitoring 

confirm that groundwater flow was locally 

towards the gasifier during operation and 

shutdown, but that in some areas, groundwater 

conditions have now started to return to 

conditions which existed prior to the 

gasification trial. 

The results of groundwater quality sampling 

undertaken at the end of the controlled shutdown 

are illustrated in Figure 1. Also indicated in 

Figure 1 are average concentrations over 

the period of gasification for the condensate 

products (water and oil) which are removed from 

the product gas at surface. These results indicate 

extremely high concentrations of phenol, 

benzene and PAH in the condensate, 

and thus the potential for high concentrations 

of these compounds in groundwater if the 

gasifier were not operated in such a way as to 

effectively remove product gas from the system 

and limit its migration into the coal seam and 

surrounding formations. 

Throughout the monitoring program, a number 

of different phenolic compounds (primarily 

phenol and m+p cresols) have been encountered 

at a number of monitoring locations. The 

highest concentrations of phenolic compounds 

have been encountered at M5 and L22, and the 

concentrations at these two locations decreased 

significantly over the period of the controlled 

shutdown. Phenolic compounds were also 

observed at other locations within the inner and 

outer monitoring zones, at concentrations which 

have fluctuated over time without any evident 

trend. The temporally and spatially variable 

concentrations of phenolic compounds in the 

area outside the obvious zone of influence of 

the gasifier indicate that such compounds are 

naturally present in the target coal aquifer. Based 

on the available information, the background 

range of concentrations for total phenol is 

illustrated in Figure 1.

We are not aware of any guideline values in 

the Australian Drinking Water Guidelines 

(NHMRC, 2004) for any of the phenolic 

compounds which have been encountered on 

the site. Advisory values are however provided 

by the USEPA (e.g. the USEPA Region 3 risk 

based concentrations). Measured concentrations 

have been consistently less than USEPA 

Region 3 risk based guideline values, except 

for values measured in the process well L22 

in the early stages of the controlled shutdown. 

Concentrations in L22 decreased rapidly in the 

early stages of the controlled shutdown, and 

have remained below the USEPA Region 3 risk 

based guideline values since early 2003. 

Benzene in groundwater has been encountered 

only in samples recovered from M5, and in 

process well L22, and does not appear to be 

naturally present in the aquifer. When compared 

with the Hoe Creek and Carbon County trials, 

the measured concentrations of benzene are 

significantly lower than observed at these 

other sites, indicating the efficacy of removal 

of contaminants from the gasifier during the 

operational and controlled shutdown phases. 

It is noted that at the completion of the controlled 

shutdown, the concentration of benzene in the 

gasifier remains above a concentration that 

would be considered acceptable for drinking 

water (the Australian Drinking Water Guideline is 

1 µg/L–NHMRC, 2004). It is also noted however, 

that the groundwater in the area of gasifier is not 

suitable for use as drinking water, as a result of 

the elevated concentrations of total dissolved 

solids. We are not aware of any guideline values 

for benzene in water used for stock watering, in 

either the Australian Drinking Water Guidelines 

(NHMRC, 2004) or the Australian and New 

Zealand Guidelines for Fresh and Marine Water 

Quality (ANZECC, 2000). 

As was the case for phenols, a variety of PAHs 

were encountered at low concentrations at a 

number of locations, with no obvious spatial 

or temporal trends. At M5, where a close 

connection with the gasifier is indicated by the 

observed concentrations of benzene and phenol, 

PAHs were encountered on one occasion at a 

concentration very marginally above the limit 

of detection. The lack of apparent influence 

of gasification on PAH concentrations at M5, 

and the temporally and spatially variable 

concentrations in the area outside the obvious 

zone of influence of the gasifier indicates that 

these compounds are also naturally present 

in the target coal aquifer. Based on the 

available information, the background range 

of concentrations for total PAH is illustrated 

in Figure 1. 

7.5.5 Results of Subsidence 

Monitoring 

Subsidence monitoring was carried out using 

seven survey monuments in the process area. 

The monitoring results indicate that surface 

subsidence, if it has occurred, has been less 

than seasonal shrink-swell movements of the 

near-surface soils. 

7.6. Issues for Full Scale 

Development at Chinchilla 

7.6. Groundwater 

The Chinchilla UCG project, has demonstrated 

that the UCG process can be operated without 

uncontrolled impacts on groundwater, provided 

pressure in the gasifier is maintained at 

significantly less than groundwater pressure in 

the coal seam and surrounding strata, creating 

a positive pressure gradient directed towards 

the gasifier. 

The issues that will need to be addressed 

in relation to groundwater for a full-scale 

development at Chinchilla are: 

• the rate of groundwater inflow to the active 

gasification zone (which has the potential 

to impact on the process, and which will 

determine the requirements for surface 

storage and treatment); 

• the rate at which the gasifier will fill with 

water as gasification is completed and the 

zone of active gasification moves forward; 

• the extent of flushing that will take place 

by groundwater flow towards the zone of 

active gasification, through previously 

gasified areas; 

• the extent of pumping that may be required 

to continue flushing zones that have been 

previously gasified; 

• the extent of in situ treatment such as air 

sparging that may be required to reduce 

non-dissolved sources of benzene in the 

previously gasified areas; and 

• the potential long term impacts of solid 

residue remaining in the gasifier. 

These issues will depend on the hydrogeological 

conditions across the site, and on the manner 

in which gasification is carried out. 

Detailed hydrogeological characterisation will be 

required in the area to be gasified. Groundwater 

modelling will be required to address the issues 

of groundwater inflow rate, and flushing of 

groundwater through previously gasified areas. 

7.6.2 Subsidence 

The issues that will need to be addressed 

in relation to subsidence for a full scale 

development at Chinchilla are: 

• the prediction of both the magnitude 

and lateral extent of any associated 

surface subsidence; and 

• the likely mechanisms of subsidence 

(e.g. continuous or discontinuous) and 

their impact on gas leakage, groundwater 

and surface installations. 

In order to address these issues, drilling and 

laboratory testing will be required to assess the 

geology and geotechnical characteristics of the 

proposed development area. Although some of 

this information has been progressively acquired 

by Linc Energy since it commenced operations, 

it should be continued as the gasification area 

expands. This testing and subsequent theoretical 

predictions will need to be supplemented by 

monitoring of the full scale operation. 


.82 

7 

REFERENCES 

Australia and New Zealand Environment and 

Conservation Council (ANZECC) and the Agriculture 

and Resource Management Council of Australia 

and New Zealand. 2000. Australian and New Zealand 

Guidelines for Fresh and Marine Water Quality. 

Volume 1. 

Blinderman, M. and Fidler. S.R. 2003. Groundwater 

at the Underground Coal Gasification Site at 

Chinchilla, Australia. Proceedings of the Water in 

Mining Conference. Brisbane, October 2003. 

Blinderman, M and Jones, R M. 2002. The Chinchilla 

IGCC project to date: underground coal gasification 

and environment. Proceedings of the 2002 Gasification 

Technologies Conference, San Francisco, 

Oct 27-30, 2002. 

Covell, J.R. and Thomas, M.H. 1996. Air sparge and 

bioremediation demonstration at an underground coal 

gasification site. In-Situ and On-Site Bioremediation 

Symposium, Vol 1, pp. 173-178. 


Dvornikova, E V. 1994. The study of the specifics 

of interaction between the UCG products and 

groundwater. Skochinsky Trans. Mining Institute, 

No. 295. (In Russian). 

Geological Survey of Queensland. 1971. Sheet SG 

56-9 – Chinchilla. Australia 1:250,000 Series. 

Golder Associates, 2005. Golder Associates Report 

Number 05632045-001 - Report on Environmental 

Performance of Underground Coal Gasification. 

Prepared for Linc Energy. Held at Golder Associates. 

Humenick, M J. 1983. Water pollution control for 

underground gasification. American Society of Civil 

Engineers, Journal of Energy Engineering, v. 110, 

n. 2, pp. 100-112. 

Humenick, M.J., Edgar, T.F., and Charbeneua, 

R.J. 1983. Environmental Effects of In Situ Coal 

Gasification. In: Underground coal gasification: 

The state of art, William B. Krantz and Robert D. Gunn, 

editors, AIChE Symposium Series, vol. 79, No. 226, 

pp. 139-153. 

National Health and Medical Research Council 

Australia. 2004. Australian Drinking Water Guidelines. 

United States Department of Energy, 2001. 

National Energy Technology Laboratory annual 

site environmental report for calendar year 2000. 

USDOE/NETL-2002/1161. 

United States Environmental Protection Agency, 

Office of Groundwater and Drinking Water. 1999. 

The class V underground injection control study. 

USEPA/816-R-99-014m. 

United States Environmental Protection 

Agency, Region 3. Risk based concentration table. 

Available at http://www.epa.gov/reg3hwmd/risk/ 

human/rbc/rbc1005.pdf. 

Wang, F.T., Mead, S.W. and Stuermer, D.H. 1983. 

Water quality monitoring at the Hoe Creek test site: 

review and preliminary conclusions. In: Underground 

coal gasification: The state of art, William B. Krantz and 

Robert D. Gunn, editors, AIChE Symposium Series, 

vol. 79, No. 226, pp. 154-173. 

INDEPENDENCE 

Golder Associates Pty Ltd is independent of all parties involved with the project activities described in this report. Golder Associates Pty Ltd will receive a professional 

fee based on standard rates plus reimbursement of out of pocket expenses for the preparation of this report. The payment of these fees is not contingent upon the success 

or otherwise of the proposed equity raising, pursuant to the Prospectus within which this report is contained. There are no pecuniary or other interests which could be 

reasonably regarded as being capable of affecting the independence of Golder Associates Pty Ltd or Scott Fidler. Golder Associates Pty Ltd, Scott Fidler and members of the 

Scott Fidler’s family, have no interest in, or entitlement to, any of the Project areas the subject of this report. 

Scott Fidler 

Principal 

Golder Associates Pty Ltd 

independent environmental report (cont)

FIGURE . Results of Groundwater Modelling 

MEASURED CONCENTRATION (µg/L) 

100,000,000 

10,000,000 

1,000,000 

100,000 

10,000 

1,000 

100 

10 

1 

0 

RANGE OF BACKGROUND 

CONCENTRATIONS FOR BOTH 

PHENOL AND TOTAL PAH 

M5 L22 MAX OUTER ZONE 

BENZENE TOTAL PHENOL TOTAL PAH 

CONDENSATE WATER CONDENSATE OIL HOE CREEK (A) CARBON CʼTY (B) 

(A) PHENOL CONCENTRATION MEASURED ADJACENT TO GASIFIER AT SIX MONTHS AFTER 

GASIFICATION. BENZENE CONCENTRATION FOR UNKNOWN LOCATION AND TIME 

(B) MAXIMUM MEASURED CONCENTRATION THREE YEARS POST - GASIFICATION 

RESULTS OF GROUNDWATER MODELLING 


.84 

8 independent 

8 March 2006 

The Directors 



Brisbane, QLD 4000 


gas to liquids 

(gtl) consultants report 

INDEPENDENT GTL CONSULTANT’S REPORT 

Dear Directors, 

Re : Summary Report – Linc Energy Coal to Liquids Fuels Project 

Further to the request by the Directors of Linc Energy Ltd, R S Consult has undertaken the attached 

independent technical review of the current testwork programme and evaluation of Linc Energy’s syngas produced at the 

Chinchilla Underground Coal Gasification site, Queensland, Australia, for the suitability 

thereof in the production of synthetic fuels by the Gas to Liquids (GTL) process. 

This report has been prepared for inclusion in a Prospectus, which Linc Energy is preparing for listing the Company on the 

Australian Stock Exchange (ASX). 

Linc Energy plans to raise approximately $22,000,000 by issuing 88,000,000 fully paid ordinary Shares at an issue price 

of $0.25 per share. 

Yours faithfully, 

Ray Swanepoel 

(Pr.Eng, BSc Chem Eng, MBA, MSAICheE) 

Consulting Engineer 

Downstream Oil & Gas, Synfuels

8. . The Chinchilla Syngas 

Based on a review of several years of operating 

data from Linc Energy’s Chinchilla site, a 

raw synthesis gas has been produced from 

Underground Coal Gasification (UCG), using 

air injection in conjunction with steam arising 

from the ingress of ground water within the 

coal seam. This gas has the following expected 

analysis after water removal: 

Component Vol % 

Hydrogen 22.85 

Carbon Monoxide 10.37 

Carbon Dioxide 18.53 

Hydrogen Sulphide 0.04 

Oxygen 0.00 

Nitrogen 44.92 

Methane 2.94 

C 2 + 0.35 

This gas analysis compares almost directly 

with published data for raw gas produced by 

the conventional oxygen-fed Lurgi gasification 

process (after correcting the gas analyses for 

nitrogen content), as opposed to Linc Energy’s 

air based underground gasification system. 

There are minor differences in the analyses but 

these are not expected to make a significant 

difference to the overall operation. 

Based on this gas composition, test work was 

commenced at the University of Kentucky’s 

Centre for Applied Energy Research (CAER) 

based in Lexington, Kentucky, USA using a 

simulated syngas (with hydrogen sulphide 

and water removed). To date three runs have 

been completed, the first on an iron based 

catalyst, the second on a generic CAER cobalt 

catalyst with the subsequent test using a 

commercially available cobalt catalyst. All 

tests showed that the catalysts performed as 

expected on a laboratory basis and that there 

were no unexpected problems arising from the 

gas analysis, over a period in excess of 1000 

hours of continuous testing. A further test on a 

commercial cobalt catalyst is currently under 

way aimed at proving that conversions can be 

maintained at a commercially acceptable level 

over a sustained run, which is the expected 

mode of operation for a commercial plant. 

Future testwork will continue over the coming 

year, including the establishment of a Linc 

Energy demonstration plant at the Chinchilla 

site. This test work will be used to support the 

definition of the final design and operating 

parameters for a commercial scale plant, 

targeted at 20,000 bpd of liquid fuels. 

8.2. Scaling up of a GTL Plant 

The scale-up of a commercial plant from pilot 

and demonstration plants data is an area which 

requires specific mention. The complexity of 

scale-up depends to a large extent on the type of 

reactor envisaged. The simplest reactor type to 

scale is the tubular reactor, which requires little 

data other than that produced by a single tube 

of the commercial size. There are many such 

tubular reactors operating, not only in the GTL 

context, but for many other reaction systems as 

well such as methanol synthesis, and these have 

all been scaled from pilot plant data for single 

tubes reactors up to commercial units with more 

than 2000 tubes per reactor. 

In the most commercialised process currently 

in operation at Sasol 2 and 3 in Secunda South 

Africa, original plant designs were developed 

from demonstration units operated by MW 

Kellogg in Texas in the 1950s for the original 

Synthol plant at Sasol I. These units were then 

scaled up by a factor of 2.5 for the larger process 

units constructed at Secunda for Sasol II and 

Sasol III. These plants were commissioned 

in record time, and operations were highly 

successful from the start. a 

The latest development in GTL reaction systems 

is the so-called slurry bed reactor design, which 

is less capital intensive than the tubular reactors 

or the circulating fluid bed reactors in use 

commercially for many years. The design 

was pioneered by Sasol. The first testwork on 

an research and development basis was done 

on a bench scale, similar to the current testing 

under way at CAER. This was followed by a 

50mm diameter pilot plant, from which data the 

design of a 1 meter diameter demonstration unit 

was undertaken. b 

This unit was commissioned in 1990, and 

employed to investigate the hydrodynamics, 

heat transfer and product separation on a 

scale of 75 bpd of liquid products. In May of 

1993 a commercial scale slurry reactor was 

commissioned producing 2500 bpd of liquid 

fuels. This reactor achieved an availability of 

over 98% in its first year of operation and this 

performance has been maintained ever since. 

Current plant designs are now based upon 

single stream reactors producing 10,000 

bpd of liquids. 

In addition to the Sasol system several 

international licensors are now offering both 

tubular as well as slurry reactor systems. All 

of these have been tested on both the pilot and 

demonstration scale. In particular, Syntroleum 

have a demonstration plant of 85 bpd capacity 

which has been operating for some time at the 

Port of Catoosa in Oklahoma. It is significant 

that this plant capacity is of a slightly larger 

capacity than that which formed the basis for the 

Sasol commercial designs. 

From the above, it is clear that although 

scale-up of reactor vessels is not necessarily a 

simple matter, the issue of scaling up to a full 

commercial plant has readily been addressed 

and overcome with numerous large commercial 

operations bearing testimony to this fact. 

8.3. Relationship with 

Syntroleum Corporation 

Syntroleum has been engaged in the research 

and development of GTL processes for close 

to 20 years. Their process development has 

been centred on using air blown reforming 

of natural gas and its subsequent conversion 

to GTL products in a number of different 

Fischer-Tropsch reactor systems, the most 

recent of which is the slurry system employed at 

Catoosa. In many respects, the Syntroleum air 

blown process directly simulates the expected 

operation of the Chinchilla plant in that the 

nitrogen rich (~45%) syngas product is as a 

result of using air in the reforming reaction as 

opposed to oxygen. 


.86 

8 

independent gas to liquids (gtl) consultants report (cont) 

Linc Energy entered into a Memorandum of 

Agreement with Syntroleum, relating to GTL 

development. That agreement is summarized 

elsewhere in the Prospectus to which this report 

is attached. 

The main distinction between the Chinchilla 

operation and that of Syntroleum is that the 

Chinchilla plant will be coal based with the 

expected syngas analysis not expected to 

differ significantly from that employed in the 

Syntroleum process. This introduces some 

additional impurities such as ammonia and 

sulphur compounds such as carbonyl sulphide 

which are undesirable catalyst poisons for the 

Fischer-Tropsch catalyst systems. Although 

Syntroleum do not have direct experience in coal 

based technology, it is fortunate that commercial 

gas cleaning processes such as Rectisol from 

Lurgi and other options such as Selexol from 

Universal Oil Products are available and have 

been proven over many years (in the case of the 

Lurgi processes for more than 50 years in the 

Sasol coal-based plants). These processes are 

licensed and guaranteed commercially, and gas 

cleanup is not considered to be a risk. 

8.4. Pilot Demonstration Plant 

Linc Energy proposes to design and construct 

an up to 5 bpd pilot/demonstration unit at the 

Chinchilla site. The process design will be 

conducted by Syntroleum, using their process. 

Supplementary design data will be obtained from 

the current and future test work at the University 

of Kentucky and if required by Syntroleum at 

their research facilities in Tulsa, Oklahoma. 

This will permit the operation of a test unit on 

the actual syngas as produced by the UCG 

system at Chinchilla, and data thus obtained 

will be more exact than that obtained from 

simulated gas on a bench scale. It will also allow 

Syntroleum to obtain reliable scale-up data for 

the development of a commercial reactor design 

based on this test work, their own research and 

development data and the semi commercial data 

from the Catoosa plant. 


This facility will represent one of only a few 

semi-commercial demonstration units worldwide, 

and one of even fewer operating directly 

on coal based gas (other than the Sasol and 

Shell commercial plants). 

8.5. University of Kentucky 

Test work on behalf of Linc Energy has been 

conducted at the University of Kentucky (Centre 

for Applied Energy Research, CAER) on an 

ongoing basis since May of 2005. The CAER 

is well known internationally for its research 

and development activities in the field of 

Fischer-Tropsch technology and in fact provides 

consulting services to a number of the major 

oil companies in the industry. The University of 

Kentucky was chosen to perform test work on the 

simulated Linc Syngas on both iron and cobalt 

catalysts on the basis of their experience and 

international reputation in this field. 

The tests conducted thus far have been targeted 

at the demonstration of the suitability of the Linc 

syngas for use as a feed to an F-T process, and 

have thus far been successful in this regard. 

In the first two tests, no attempt was made to 

maintain catalyst activity by either catalyst 

regeneration or temperature increases, but 

rather to get an indication of the de-activation 

rate of the catalyst(s). Emphasis has now been 

placed on the use of cobalt catalyst since the 

first test conducted on an iron catalyst indicated 

that cobalt is the preferred option with regards 

longevity, hydrocarbon recovery and increased 

conversion rates. 

Test 3, conducted on the commercially available 

cobalt catalyst showed an initial CO conversion 

level of 84%, with a de-activation rate of 1.1% 

per day. The effect of water in the feedstock was 

examined after some 580 hours when water was 

added to the feed gas. This caused the 

de-activation rate to increase to 1.8% per 

day. After 930 hours, the space velocity 

was decreased by 25%. This resulted in an 

immediate increase in CO conversion from 

30 % to 46 % and the de-activation rate 

decreased to 0.4% per day. These results 

were in line with commercial catalyst expected 

performance and served to confirm that there 

was no adverse effect emanating from the 

synthesis gas analysis. The current test work 

which is just beginning will be conducted again 

on a commercial cobalt catalyst, this time with 

the objective of demonstrating the ability to 

maintain relatively high conversions by gradually 

increasing the reactor inlet temperature. 

An example of these test results is shown in 

the figure adjacent. 

Linc Energy advises that the need for 

further catalyst testing will be reviewed at 

the conclusion of the current tests and in 

conjunction with Syntroleum. 

8.6. GTL Equipment 

and Procurement 

The GTL processes have no particular equipment 

requirements which are not covered by the 

normal equipment suppliers to the oil refining 

and petrochemical industries. The reactors 

will be specifically fabricated to the licensor’s 

design and are no different in their requirements 

than conventional refining vessels such as 

hydrocracker and/or FCC reactors. 

All equipment can be procured on a worldwide 

basis and there are a large number of 

experienced and reputable suppliers with very 

significant track records from which choices 

can be made. 

8.7. Capital Expenditure 

Linc Energy advises that as at the date of this 

report, the final configuration of the Chinchilla 

plant has not been finalized. Therefore, 

any capital estimates are at best order of 

magnitude and will depend entirely on the final 

configuration selected. However the following 

figures are offered as an indication of the capital 

requirements for the plant. 

Published data on the specific investment 

costs for GTL plants based on natural gas 

conversion varies considerably, however current 

figures seem to lie in the range of US$25,000

FIGURE . – Comparative De-activation Rates 

CO Conversion 

90,000 

80,000 

70,000 

60,000 

50,000 

40,000 

30,000 

20,000 

10,000 

0.000 

1.1% PER DAY 

FIRST 500 HOURS AFTER WATER ADDED AFTER SV REDUCTION 

TOS Hours 

1.8% PER DAY 

LINEA FIRST 500 HOURS LINEA AFTER WATER ADDED LINEA AFTER SV REDUCTION 

0.4% PER DAY 

0.00 200.00 

400.00 600.00 800.00 1000.00 1200.00 

to US$35,000 per barrel per day of liquids 

produced. Thus using a figure of say US$27,500 

for a $20,000 bpd plant would give an inside 

battery limit (i.e. process plants only) of 

US$549 million. A further 30 to 40% would 

have to be added for offsites and utilities, 

interconnecting piping etc., giving a total 

investment of US$769 million, US Gulf 

Coast basis. 

A typical GTL plant would include air 

separation (+- US$202 million), gas reforming 

(+- US$179 million), the Fischer-Tropsch unit 

(+- US$100 million), and product work-up 

including hydroprocessing and reaction water 

treatment (+- US$68 million). For the Chinchilla 

plant, air separation and reforming are not 

required, as raw synthesis gas is produced in 

the mine. However, because of the large volumes 

of gas, the F-T unit would be more expensive 

(physically larger) and raw syngas pre-treatment 

would be required in the form of a Rectisol 

process or equivalent. Thus approximately 

US$381 million can be deducted, while 

additional amounts of about US$100 million for 

air compression, US$245 million for Rectisol 

and US$4 million for sulphur recovery will have 

to be added. This would give an expected capital 

cost of the order of US$541 million for a 20,000 

bpd plant (excluding inside battery limit costs 

for offsites and utilities). 

Process Unit 

20000 bpd GTL Plant Mid 

2005 costs 

It must be noted that these figures are 

approximates only, and will depend on the 

ultimate configuration of the plant. They also 

exclude the costs of facilities at the well head 

for the pre-treatment of the raw gas for 

the removal of water and creosotes. 

Chinchilla 20000 bpd 

Mid 2005 costs 

Air separation US$202 million Not required 

Air Compression In air sep’n cost US$100 million 

Reforming US$179 million Not required 

Rectisol gas treating Not required US$245 million 

Fischer-Tropsch US$100 million US$124 million 

Hydro-processing, water treatment US$68 million US$68 million 

Sulphur Recovery Not required US$4 million 

Subtotal ISBL US$549 million US$541 million 


.88 

8 

independent gas to liquids (gtl) consultants report (cont) 

It is also significant that an oxygen blown 

gasification plant of the equivalent size would 

add about a further US$1,200 million to the 

overall cost (Linc Energy’s air-blown Chinchilla 

project does not require the addition of oxygen). 

8.8. The place of Synfuels in 

the current Markets 

The primary drivers for the interest in 

synfuels technologies are : 

• The monetization of stranded gas; 

• The increase in oil prices, currently 

(February 2006 in the region of 

US$60.00 per barrel); and 

• Environmental pressures to reduce gas 

flaring and reduce auto emissions, the latter 

resulting in ever more stringent specifications 

with respect to sulphur content, particulate 

emissions, aromatics content, polynuclear 

aromatics and NOx emissions. 

Synthetic products, as produced by the Fischer- 

Tropsch processes, whether from gas or coal 

feedstocks, have unique properties which will 

ensure a demand for them in the future. One of 

the key drivers for this demand is environmental 

pressure which ultimately relates to improved 

quality and premium products. 

Synthetic diesel has essentially zero sulphur, 

a high cetane index (in excess of 70), and 

less than 5% PNA’s. One study c has estimated 

that synthetic diesel will result in 40 to 50% 

reduction in hydrocarbon emissions, 9% 

reduction in nitrogen oxides, and a 30% 

reduction in particulate emissions as compared 

to conventional refinery low sulphur diesel. It is 

therefore seen as a highly desirable fuel from an 

environmental standpoint. The primary market 

is expected to be for use as a blend component, 

and it is anticipated that it would command 

a premium in price over conventional diesel. 

Indeed, Shell’s Pura brand diesel sells at a 

premium relative to standard brands in Thailand d 


The global middle distillates market is currently 

estimated at about 27 million bpd, of which 

automotive diesel accounts for roughly 51%. 

Growth is expected to continue at some 3% per 

annum, driven largely by increasing sales of 

diesel driven automobiles. The Chinese market 

is less certain, but with the rapid developments 

in that country, growth rates will be at least 3% 

per annum. Synthetic diesel supply will depend 

upon the number of proposed projects that reach 

fruition in the near future. Sasol suggest an 

expected synthetic diesel capacity of 600,000 

bpd e by the period 2016 to 2019. If the expected 

growth in the diesel market continues at 3% per 

annum, then by 2016 the overall market would 

be of the order of 37 million barrels per day, 

and the synthetic diesel production would only 

represent 1.6% of the market. There thus seems 

to be little chance of an oversupply in 

this market. 

Thus GTL/CTL processes are capable of 

producing premium products at competitive 

prices to those derived from crude oil, and 

unless the crude price drops to below $25 per 

barrel which seems highly unlikely at this time, 

the market for these products will be assured. 

8.9. Effect of Oil Prices 

The production of synthetic fuels is based either 

on coal or natural gas as the feedstock. The cost 

of this feed is one of the major cost factors in 

determining the economic viability of synthetic 

products, the other being the cost of capital. 

The cost of coal or natural gas is largely 

independent of the crude oil price, whereas 

product prices are directly related to the cost 

of crude. Various studies have given natural gas 

costs at as low as US$0.50 per million BTU for 

stranded gas to as high as US$5.00 in Japan. 

A change in the cost of gas of US$0.50 per 

million BTU would shift the synthetic crude price 

by about US$5.00 per barrel f depending upon 

the scale, quality of products and variation of 

capital costs traded against operating costs. g 

With crude oil currently at US$60.00 per 

barrel product prices are high and likely to 

remain so unless there is a large change in the 

supply/demand ratio for crude oil. Depending 

on the cost of feed and the capital requirements, 

various sources have estimated the average oil 

price required to lead to financial commitments 

for synthetic fuel projects from as low as 

US$16.00 per barrel to a more realistic figure of 

US$20 to US$25 per barrel. If the crude price is 

sustained at over US$30 per barrel, then there is 

little doubt that the Fischer-Tropsch plants will 

be economically viable. 

8. 0. Conclusion 

The analyses performed so far on the Chinchilla 

project would indicate that the UCG syngas is 

suitable for the commercial scale production of 

synthetic fuels. The project should be able to be 

constructed at a cost comparable to conventional 

GTL technology, and at a much lower cost than 

other, conventional coal gasification projects. 

Scale up of the plant to commercial scale from 

the available design parameters is not a high risk 

factor as it has been demonstrated in a number 

of commercial projects currently in operation or 

under way. The use of a demonstration plant and 

design and engineering in close co-operation 

with Syntroleum, makes the project very viable 

at the current 2006 cost estimates of production 

of GTL products against current oil prices. 

(Pr. Eng BSc(Chem Eng) MBA MSAInstChE) 

R. Swanepoel

FOOTNOTES 

a. The Sasol Approach to Liquid Fuels from Coal via 

the Fischer-Tropsch Reaction 

b. Brochure – The Slurry Phase Distillate Process 

– Sasol Ltd, Johannesburg. 

c. US EIA “International Energy Outlook” 2004 

d. Iraj Rahmim Oil and Gas Journal, March 2005 

e. Van Rheede, J Oxford Energy Forum, August 2004 

f. www.chemlink.com.au 

g. US EIA office of Oil and Gas 

DISCLAIMER 

This report has been produced using currently available information as supplied by Linc Energy, the University of Kentucky test results and published data from various 

international sources. Certain interpretations and assumptions in accordance with good engineering practice have been made and no guarantees on the data in this report are 

expressed or implied and any third party in possession of this report may not rely on its conclusions without the written consent of RS Consult. 

RS Consult has no reason to believe that the information provided by Linc or others is misleading or that any material facts have not been provided and has utilized such 

information without verification unless specifically noted otherwise. RS Consult accepts no liability for errors or inaccuracies in information provided by others. RS Consult 

has collected sufficient information for the preparation of this report to assist the reader to assess on a conceptual basis the technical issues and risks associated with Linc 

Energy Ltd’s GTL project. As this report is prepared on a conceptual basis reliance should not be made on the report for detailed financial revenues, costings, specifications 

or quantities prior to completion of detailed engineering and technical studies. No implied warranty of merchantability or fitness for a particular purpose shall apply. 

RS Consult accepts no liability to any third party recipient of this report and neither the report nor any part thereof shall be provided to third parties except as provided herein. 

The report may not be relied upon by third parties and third party use is subject to the terms and conditions of RS Consult’s arrangement with Linc Energy Ltd. 

INDEPENDENCE 

Ray Swanepoel of RS Consult is independent of all parties involved with the project activities described in this report. Ray Swanepoel will receive a professional fee based on 

standard rates plus reimbursement of out of pocket expenses for the preparation of this report. The payment of these fees is not contingent upon the success or otherwise of 

the proposed equity raising, pursuant to the Prospectus within which this report is contained. There are no pecuniary or other interests, which could be reasonably regarded 

as being capable of affecting the independence of RS Consult or Ray Swanepoel. RS Consult or Ray Swanepoel, and members of the undersigned’s family, have no interest in, 

or entitlement to, any of the project areas the subject of this report. 


.90 

9 solicitor’s 

9 March 2006 

The Directors 

Linc Energy Limited 


Brisbane Queensland 4000 

Dear Sirs 


report 

This report has been prepared for inclusion in a Prospectus to be dated on or about 9 March 2006 for the issue by Linc Energy 

Limited (ACN 076 157 045) (Linc Energy) of 88,000,000 Shares at an issue price of $0.25 cents per Share to raise $22,000,000. 

This report relates to various Queensland 

exploration permits for coal, applications 

for exploration permits for coal and mineral 

development licences (Tenements). A schedule 

of Tenements is annexed to this report. 

9. . Searches 

9. . Tenement Searches 

On 2 March 2006 we conducted a public 

enquiry search of the registers maintained by the 

Queensland Department of Natural Resources 

& Mines (Department) to obtain certain 

information in relation to each of the Tenements. 

9. .2 Native Title Searches 

On 2 March 2006 we conducted a search at the 

Register and Schedule of Native Title Claims 

maintained by the Queensland division of the 

National Native Title Tribunal (NNTT). 

9. .3 Material Contracts 

Linc Energy has also provided us with copies 

of material contracts in relation to the 

Tenements. We have assumed the accuracy of 

the material contracts provided by Linc Energy. 

The report is based on the results of our 

independent searches and on our assessment 

of the material contracts provided by 


9.2. Linc Energy Tenements 

9.2. Current EPCs 

Linc Energy has an interest in EPCs 526, 635, 

704, 854, 897, 898, 899, 902, 908, 909, 910 

and 980, each of which is an exploration permit 

for coal in Queensland. Particulars of these 

tenements are set out in the Schedule 

of Tenements. 

Linc Energy has a 100% interest in each of 

those EPCs except for EPC 526. 

9.2. . EPC 526 

Linc Energy holds a 99% interest in EPC 526 

with the remaining 1% interest held by XStrata 

Coal Queensland Pty Ltd. Pursuant to a deed 

of assignment dated 7 March 2002, Linc 

transferred a 1% interest in EPC 526 to 

XStrata Coal Queensland Pty Ltd. 

Under the terms of that agreement, XStrata Coal 

Queensland Pty Ltd has the exclusive right to 

undertake exploration and to seek a form of 

tenure over certain of the sub-blocks within 

EPC 526 (XStrata Sub-blocks). 

We have been informed by the Department that 

XStrata Coal Queensland Pty Ltd has applied for 

a mineral development licence over the XStrata 

Sub-blocks within EPC 526. Upon the grant of 

that mineral development licence XStrata Coal 

Queensland Pty Ltd will be required to transfer 

its 1% interest in EPC 526 to Linc Energy. 

9.2.2 Applications 

EPC 938 is an application for an exploration 

permit for coal in Queensland. Linc Energy 

has a 100% interest in EPC 938. Particulars of 

EPC 938 are set out in the Schedule 

of Tenements. 

9.2.3 Mineral Development Licences 

(a) MDL 309 

MDL 309 is a mineral development licence 

granted in Queensland. The licence was granted 

in relation to the mining of coal. Particulars 

of MDL 309 are detailed in the Schedule 

of Tenements. 

Linc Energy holds a 100% interest in 

the licence.

(b) MDL 36 

MDL 361 is an application for a mineral 

development licence in Queensland. MDL 361 

was applied for over sub-blocks that form part 

of EPC 526. Particulars of MDL 361 are 

detailed in the Schedule of Tenements. 

If granted, Linc Energy will hold a 100% interest 

in the licence. 

9.3. Legislation relating 

to Tenements 

Each of the Tenements were granted or applied 

for under the Mineral Resources Act 1989 (Qld) 

(Act). The Act deals with, amongst other things, 

the granting of exploration permits and mineral 

development licences. 

9.3. Exploration Permits 

Before exploration for coal can begin an 

exploration permit for coal must be obtained. 

An exploration permit is a tenure granted for 

the purpose of exploration. If exploration is 

successful, the holder of the permit may 

apply for a mineral development licence 

or mining lease. 

An exploration permit allows the holder to 

take certain actions to determine the existence, 

quality and quantity of minerals on, in or 

under land. 

An exploration permit when granted will specify, 

amongst other things, the program of works and 

studies to be carried out under the permit. 

An exploration permit may be granted for a 

period up to 5 years and may be renewed. 

Once a significant mineral resource has been 

identified a holder has the option of 

undertaking further exploration under a 

mineral development licence. 

9.3.2 Mineral Development Licences 

A mineral development licence allows the holder 

to undertake more thorough testing to evaluate 

the economic viability of developing the 

mineral resource. 

A mineral development licence may be applied 

for in respect of land which is the subject of 

an exploration permit or an earlier mineral 

development licence. 

The initial term of a mineral development 

licence may not exceed 5 years unless 

otherwise approved by the Minister. 

9.3.3 Mining Leases 

A mining lease must be obtained before full 

scale mining can take place. The term of a 

mining lease is determined in accordance 

with the amount of reserves identified and the 

projected mine life. 

9.4. Native Title in Australia 

The High Court in Mabo v Queensland (No.2): 

(1992) 175 CLR 1 held that native title may be 

established by persons where a continuous 

tradition or association with the land is proven 

and where the title has not been extinguished by 

a valid act of the Crown or by valid legislation. 

9.4. Commonwealth Native 

Title Legislation 

The objects of the Native Title Act 1993 

(Cth) (NTA) are: 

(a) to provide for the recognition and 

protection of native title; 

(b) to establish ways in which future dealings 

affecting native title may proceed; 

(c) to establish a mechanism for determining 

claims to native title; 

(d) to provide for, or permit, the validation of 

past acts invalidated because of the existence 

of native title and; 

(e) to provide for, the validity of future acts. 

The NTA also contemplates that the Australian 

States and Territories will enact legislation 

which will enable those States and Territories 

to validate certain of their own past acts. 

(a) Extinguishment of Native Title 

Under the NTA, native title is extinguished on 

land and waters in circumstances including 

where there has been an “exclusive possession 

act” made on or before 23 December 1996. 

Exclusive possession acts include: 

(i) a valid grant of freehold land; 

(ii) exclusive possession leases; 

(iii) certain public works; and 

(iv) certain scheduled interests. 

The areas covered by the Tenements are 

substantial. We have not been instructed to 

conduct, and we understand that the Company 

has not otherwise conducted, the extensive 

land tenure, anthropological and ethnographic 

research that would be necessary to determine 

whether the land and waters covered by the 

Tenements have been subject to exclusive 

possession acts. 

While some of the Tenements have been granted 

over land which has been subject to exclusive 

possession acts, we are aware that areas of land 

covered by the Tenements includes areas of land 

over which native title may continue to exist. 

Accordingly, for the purpose of this report it 

has been assumed that native title may exist in 

respect of some of the land and waters that are 

covered by the Tenements. 

(b) Native Title Claims 

Persons or groups who claim to hold native title 

may lodge a claim with the Federal Court. 

The lodging of a claim in respect of a particular 

area does not mean that native title exists in 

the area. The existence and nature of native 

title rights enjoyed by a claimant in relation to 

particular land or waters is a question of fact to 

be proved by evidence and ultimately determined 

by the Federal Court. None of the claims noted 

in the Schedule of Tenements which form part 

of this report has to date been the subject of a 

determination by the Federal Court. 

The absence of native title claims in an area 

does not mean that native title does not exist 

in that area. 


.92 

9 


solicitor’s report (cont) 

A claim will be registered on the Register of 

the National Native Title Tribunal (NNTT) if the 

claim satisfies certain requirements set out in the 

NTA. Registered claimants are entitled to certain 

procedural rights under the NTA such as the 

right to negotiate. 

(c) The “Expedited Procedure” 

Some acts which have minimal impact on the 

native title rights and interests of indigenous 

Australians may qualify for the expedited 

procedure. This procedure enables most 

minimal impact tenement applications to be 

granted without delays or objections while 

native title claims are underway. That is, the 

right to negotiate will not apply to the 

tenement application. 

The expedited procedure only applies to an 

act that is not likely to: 

(i) interfere directly with the carrying out of 

community and social activities of native 

title holders; 

(ii) interfere with areas or sites of particular 

traditional significance to native title 

holders; or 

(iii) involve any major disturbance to any 

land or waters. 

Where a government department that manages 

tenement applications intends to grant a 

tenement using the expedited procedure, it 

must indicate this intention in the notice that it 

is required to publish indicating that it intends 

to grant a tenement (Section 29 notice). If no 

objection is lodged within four months of the 

notification date stated in the Section 29 notice, 

the tenement can be granted without delay. 

If an objection is lodged, the objection is not to 

the tenement being granted, but is an objection 

to the application being expedited. That is, the 

objection is to the grant being made without 

complying with the right to negotiate procedures 

contained in the NTA. 

Where a Tenement is granted under the 

expedited procedure, the tenement will 

include the Native Title Protection Conditions. 

Essentially, the conditions set out timeframes 

and procedures that must be followed before 

exploration begins on the land. 

(d) The Validity of Exploration 

Permits Generally 

All Tenements which were granted prior to 

1 January 1994 and which would otherwise have 

been invalid because of the existence of native 

title are regarded as “past acts” and are validated 

by relevant State validation legislation. 

EPC 526 was granted prior to 1 January 1994. 

Pursuant to the Native Title (Queensland) 

Act 1993 (Qld), Tenements granted prior to 

1 January 1994 are valid and can be regarded 

as valid grants and all rights granted thereunder 

are fully exercisable. Even if a native claim is 

subsequently made or native title is determined 

to exist over an area of land the subject of such 

a tenement, the relevant tenement will remain 

valid for the duration of its term and the holder 

of the tenement may exercise all rights under 

the tenement. 

(e) Titles Granted after January 994 

All acts affecting native title occurring after 

1 January 1994 are subject to the NTA. 

In general, the grant of a tenement is an act that 

is capable of affecting native title (in the absence 

of extinguishment), and must therefore comply 

with the future act process of the NTA. 

(f) Future Acts 

The NTA provides that a future act that affects 

native title will be valid if it is covered by any of 

the categories detailed in Part 2 Division 3 of 

the NTA. If the future act is not covered by any 

of these provisions, the act will be invalid to 

the extent of any inconsistency with native title. 

Valid future acts include acts that comply with 

the “right to negotiate” procedure under the 

NTA or are authorised under an “indigenous 

land use agreement”. 

(g) Renewals 

Section 26D of the NTA relevantly provides 

that the right to negotiate does not apply to the 

renewal, regrant, remaking or the extension of a 

term of an earlier right to mine if the earlier right 

was created on or before 23 December 1996 by 

an act that is valid provided: 

(i) the area to which the earlier right relates 

is not extended; 

(ii) the term of the right is not longer than the 

term of the earlier right; and 

(iii) no rights are created in connection with the 

rights that were not created in connection 

with the earlier right. 

Section 26D further provides that where the 

conditions outlined above are satisfied and the 

original tenement was made in compliance with 

the right to negotiate process then the right to 

negotiate process will not apply to the renewal, 

regrant, remaking or extension of the term. 

We have not reviewed the tenements to ensure 

that to the extent they have been renewed, 

regranted, remade or extended they do not 

breach the conditions set out in paragraphs 

(i) to (iii) above. 

(h) Right to Negotiate Process 

The NTA provides that where the Government, 

inter alia, grants an exploration permit or a 

mineral development licence over land and 

waters, the grant will only be valid if the 

“right to negotiate” procedures under the 

NTA are followed or if an indigenous land use 

agreement is reached. Generally, the States and 

Territories will not process tenement applications 

containing Crown land that are subject to 

native title claims without following the right 

to negotiate process (or a complementary 

state-based legislative procedure). 

From September 2000 to April 2003 Queensland 

had in place an alternate regime under the 

Mineral Resources Act 1989 (Qld) relating to 

native title and the grant of mining tenements. 

From April 2003, the right to negotiate 

procedures under the NTA apply to the 

granting of mining tenements in Queensland.

Under the NTA, the right to negotiate process 

involves the State or Territory publishing a 

notice regarding the grant which specifies a 

notification day, followed by a 6 month period 

of negotiation from the notification day between 

the State, the tenement applicant and relevant 

registered native title claimants. If the parties fail 

to reach an agreement which enables the grant 

to be processed, the matter may proceed to be 

determined before the NNTT. 

If at the expiration of 4 months from the 

notification day there are no registered native 

title parties, the State or Territory may grant 

the tenement. 

(i) Indigenous Land Use Agreements 

Indigenous land use agreements (ILUAs) Offer 

an alternative to the right to negotiate process. 

An ILUA is an agreement between parties 

concerning the use of areas of land and water 

where native title has been determined to exist 

or where native title is claimed to exist. 

9.4.2 Queensland Native 

Title Legislation 

The Native Title (Queensland) Act 1993 (Qld) 

validates past and intermediate period acts in 

accordance with the terms and requirements of 

the NTA. It also confirms the past extinguishment 

of native title by certain valid or validated acts, 

including previous exclusive possession acts, 

in accordance with the NTA. 

As detailed above, the Mineral Resources Act 

1989 (Qld) established an alternate regime 

to take the place of the right to negotiate 

procedures in the NTA. That regime applied 

during the period between September 2000 

and April 2003. 

9.5. Aboriginal Heritage 

Legislation in Australia 

9.5. Commonwealth Legislation 

The Aboriginal and Torres Strait Islander 

Heritage Protection Act 1984 (Cth), as amended 

provides for the preservation and protection 

from injury or desecration of areas and objects 

in Australia and in Australian waters that are of 

particular significance to Aboriginal people in 

accordance with Aboriginal tradition. 

9.5.2. Queensland Legislation 

The Cultural Record (Landscapes Queensland 

and Queensland Estate) Act 1987 (Qld) 

provides for the preservation and management 

of “Landscapes Queensland” and the 

“Queensland Estate”. 

In essence, Landscapes Queensland are areas 

or features of Queensland that have been used 

or affected in some way by humans and are 

significant to humans for any anthropological, 

historic, prehistoric or societal reason. 

Queensland Estates means any evidence of 

human occupation in Queensland at any time 

that is at least 30 years in the past. 

The Act operates to protect the cultural heritage 

of Queensland including the cultural heritage 

of Aborigines. 

The Queensland Heritage Act 1992 (Qld) 

also makes provision for the conservation 

of Queensland’s cultural heritage. 

We have not conducted searches of registers 

maintained under heritage legislation. 

9.6. Assumptions 

For the purposes of reviewing native title 

issues in respect of the Tenements, we have 

assumed that: 

(a) the Tenements have been validly granted 

(apart from potential invalidity on native title 

grounds), that is, that the correct statutory, 

administrative and other procedures were 

complied with in the grant of the Tenements; 

(b) native title may exist in the areas covered 

by the Tenements as at the date of their 

grant. We acknowledge that it is possible 

that native title may not exist in part or in all 

of these areas, or if it did exist, it may have 

been previously extinguished by a prior 

tenure. However, we have not conducted any 

independent land tenure, ethnographic and 

anthropological investigations in this regard; 

(c) the native title claim search results and 

other information provided by the NNTT 

is accurate; and 

(d) the information provided by the Department, 

in relation to the registers and databases 

maintained by the Department is accurate. 

9.7. Native Title Claims 

In this Section of the Report we detail the 

extent to which native title claims may impact 

on the Tenements. 

9.7. Past Acts 

EPC 526 was granted on 27 April 1993. 

Therefore, it is a past act and any native title 

claims in relation to the land covered by that 

Tenement will be suspended during the period 

of its operation. The search of the NNTT 

registers shows that no native title claims have 

been lodged in relation to the area covered by 

EPC 526. 

As detailed in Section 9.2.1.1, Linc Energy 

entered into an agreement with XStrata Coal 

Queensland Pty Ltd in relation to EPC 526. 

We have been informed by the Department that 

XStrata Coal Queensland Pty Ltd has applied 

for a mineral development license over certain 

of the sub-blocks within EPC 526. Further, 

we have been informed by the Department 

that the remaining sub-blocks in EPC 526 are 

included in Linc Energy application for a mineral 

development license, MDL 361. 

9.7.2 Extinguished Land 

As detailed in this Report certain acts that 

occurred in the past may have extinguished 

native title. The vast majority of Linc Energy 

Tenements were applied for over land where 

either all or at least 90% of the land the 

subject of the Tenement application was 

extinguished land. 

The Department will grant a tenement over 

extinguished land where greater than 90% of 

the land covered by the tenement application is 

land where native title has been extinguished. 

Once granted, the Tenement holder must bring 

into the Tenement the remaining area of nonextinguished 

land once any native title claims 

have been resolved. 


.94 

9 



EPCs 635, 704, 897, 898, 899, 902, 908, 

909, 910 and 980 were applied for over fully 

extinguished land or over land where at least 

90% of the land included in the Tenements 

applications was extinguished land. As per 

the Department’s policy, the Tenements were 

granted over the extinguished land included 

in those applications. 

The search of the registers maintained by the 

NNTT shows that numerous native title claims 

have been lodged and accepted for registration 

over land that is covered by the Tenements listed 

above. However, each of those native title claims 

excludes from the claim any areas within the 

claimed area over which native title has 

been extinguished. 

Therefore, while the search of the NNTT register 

shows that native title has been claimed over the 

land the subject of the Tenements above, in fact, 

native title is not being claimed over native title 

extinguished land. As detailed above, each of the 

Tenements listed above have been granted over 

land where native title has been extinguished 

over at least 90% of the land included in the 

Tenement application. 

9.7.3 Expedited procedure grant 

(a) EPC 854 

Our search of the registers maintained by the 

NNTT shows that a native title claim with the 

NNTT number QC04/006 was lodged over land 

included in EPC 854. That claim was accepted 

for registration on 5 July 2004. A further native 

title claim with the NNTT number QC05/004 

was lodged with the NNTT. That claim was not 

accepted for registration. 

EPC 854 was granted on 30 August 2004 using 

the expedited procedure. Therefore, Linc Energy 

was not required to comply with the right to 

negotiate process or enter into an ILUA with the 

registered native title claimants. 

However, there is no expedited procedure 

process in place for the granting of mineral 

development licences. Therefore, should Linc 

Energy wish to obtain a mineral development 

licence over the land covered by EPC 854, 

it will need to comply with the right to negotiate 

process or enter into an ILUA with the registered 

native title claimants. 

(b) EPC 938 

Three claims for native title have been lodged 

in relation to the area the subject of EPC 938. 

These are native title claims with the NNTT 

number QC01/006, QC99/004 and QC99/005. 

Each of the above native title claims were 

accepted for registration. 

EPC 938 is currently being processed under 

the expedited procedure. If an objection is 

lodged by the native title claimants in relation to 

the granting of the expedited procedure permit, 

Linc Energy will need to comply with the future 

act process or negotiate an ILUA before the 

tenement will be granted. 

9.8. Mineral Development Licences 

9.8. MDL 309 

MDL 309 was granted over freehold land. 

Accordingly, any native title over that land 

will have been extinguished. 

9.8.2 MDL 36 

MDL 361 is an application for a mineral 

development licence. No native title claims have 

been lodged over the land covered by MDL 361. 

If a native title claim is accepted for registration 

in relation to MDL 361, Linc Energy will need 

to comply with the right to negotiate process or 

enter into an ILUA with the claimant. 

9.9. Consent 

TressCox have consented to the inclusion of this 

report in the Prospectus in the form and context 

in which it appears and have not withdrawn that 

consent before lodgement of the Prospectus with 

the ASIC. 

Yours faithfully 

TressCox

Schedule of Tenements 

Exploration Permits 

Tenement Number Date of Grant 

EPC 526 

EPC 635 

27 April 1993 

(Renewal most recently granted on 14 September 2004) 

24 December 1998 

(Renewal most recently granted on 22 December 2004) 

Expiry Date of Current 

Licence 

Native Title Status 

26 April 2006 Past act as granted pre 1 January 1994 

24 December 2006 Tenement granted over extinguished land 

EPC 854 30 August 2004 29 August 2007 Expedited procedure grant 

EPC 704 17 September 2001 16 September 2007 Tenement granted over extinguished land 

EPC 897 5 August 2005 4 August 2010 Tenement granted over extinguished land 



EPC 902 3 December 2004 2 December 2009 Tenement granted over extinguished land 

EPC 908 9 February 2005 8 February 2010 Tenement granted over extinguished land 

EPC 909 28 April 2005 27 April 2010 Tenement granted over extinguished land 

EPC 910 9 February 2005 8 February 2010 Tenement granted over extinguished land 

EPC 980 4 November 2005 3 November 2010 Tenement granted over extinguished land 

Application for Exploration Permit 

Tenement Number Date of application Term Sought Native Title Status 

EPC 938 8 February 2005 5 years Being processed under expedited procedure. 

Mineral Development Licence 

Tenement Number Date of initial grant Expiry Date of Current Licence Renewal Lodged Native Title Status 

MDL 309 - Licence 

remains current pending 

approval of lodged 

renewal 

Application for Mineral Development Licence 

25 November 1999 30 November 2005 2 June 2005 Tenement granted over extinguished land 

Tenement Number Date of Application Term sought Minerals Native Title Status 

MDL 361 14 April 2005 5 years Coal and coal seam gas Mostly Crown land. No native title claims lodged. 


.96 

9 

Yearly Commitments 

Applications for Exploration Permits for Coal 

Tenement Number Offered Annual Commitment 

EPC 938 Year 1 

Mineral Development Licences 



Year 2 

Year 3 

Year 4 

Year 5 

$40,000 

$48,000 

$60,000 

$60,000 

$60,000 

Tenement Number Current Year Reported Expenditure 

MDL 309 Year 6 Year 1 

Year 2 

Year 3 

Year 4 

Year 5 

Year 6 

$4,606,119 

$3,707,097 

$1,459,915 

$699,935 

$771,451

Exploration Permits for Coal 

Tenement Number Current year Annual Commitment Reported Expenditure 

EPC 526* Year 13 Year 1 

Year 2 

Year 3 

Year 4 

Year 5 

Year 6 

Year 7 

Year 8 

Year 9 

Year 10 

Year 11 

Year 12 

Year 13 

EPC 635 Year 8 Year 1 

Year 2 

Year 3 

Year 4 

Year 5 

Year 6 

Year 7 

Year 8 


Year 2 

Year 3 

Year 4 

Year 5 

Year 6 


Year 2 

Year 3 


Year 2 

Year 3 

Year 4 

Year 5 


Year 2 

Year 3 

Year 4 

Year 5 


Year 2 

Year 3 

Year 4 

Year 5 


Year 2 

Year 3 

Year 4 

Year 5 


Year 2 

Year 3 

Year 4 

Year 5 


Year 2 

Year 3 

Year 4 

Year 5 


Year 2 

Year 3 

Year 4 

Year 5 


Year 2 

Year 3 

Year 4 

Year 5 

$60,000 

$150,000 

$100,000 

$150,000 

$200,000 

$1,000 

$1,000 

$1,000 

$1,000 

$450,000 

$310,000 

$1,000 

$1,000 

$115,000 

$140,000 

$155,000 

$165,000 

$200,000 

$1,000 

$160,000 

$200,000 

$109,000 

$131,000 

$0 

$40,000 

$75,000 

$100,000 

$150,000 

$180,000 

$170,000 

$30,000 

$50,000 

$75,000 

$100,000 

$100,000 

$30,000 

$50,000 

$75,000 

$100,000 

$100,000 

$30,000 

$50,000 

$75,000 

$100,000 

$100,000 

$30,000 

$50,000 

$75,000 

$100,000 

$100,000 

$60,000 

$80,000 

$100,000 

$120,000 

$140,000 

$60,000 

$80,000 

$100,000 

$120,000 

$140,000 

$30,000 

$50,000 

$75,000 

$100,000 

$100,000 

$80,000 

$125,000 

$175,000 

$250,000 

$250,000 

Year 1 

Year 2 

Year 3 

Year 4 

Year 5 

Year 6 

Year 7 

Year 8 

Year 9 

Year 10 

Year 11 

Year 12 

Year 13 

Year 1 

Year 2 

Year 3 

Year 4 

Year 5 

Year 6 

Year 7 

Year 1 

Year 2 

Year 3 

Year 4 

Year 5 

Year 6 

*Linc holds a 99% interest in EPC 526, with the remaining 1% interest held by XStrata Coal Queensland Pty Ltd. 

$58,625 

$125,040 

$113,916 

$159,850 

$0 

$0 

$0 

$0 

$5,115 

$97,051 

$952,369 

$9,704 

$272,274 

$99,170 

$111,183 

$0 

$11,000 

$13,135 

$69,156 

$21,747 

$0 

$0 

$41,067 

Year 1 $41,067 

Year 1 $8,484 

Year 1 Not yet lodged 

Year 1 Not yet lodged 


.98 

10 

General Risks 

There are a number of risks, both specific 

to Linc Energy and general investment risks, 

which may materially and adversely affect the 

future operating and financial performance of 

Linc Energy and the value of its Shares. Many 

of these risks are outside the control of the 

Company and the Directors. As a result of 

these risks, there can be no guarantee that 

Linc Energy will achieve its stated objectives. 

Prior to making an investment decision, 

Applicants should read the entire Prospectus 

and carefully consider the risk factors set out 

in this Prospectus. Applicants should also 

have regard to their own investment objectives 

and financial circumstances. This is not an 

exhaustive list of risk factors and Applicants 

should seek professional guidance from their 

stockbroker, solicitor, accountant or other 

professional adviser before deciding whether 

to invest in Shares Offered pursuant to 


As a result of the risk factors set out in this 

Section, an investment in Linc Energy should 

be regarded as a speculative investment. 


risk factors 

Stock Market Fluctuations 

The price of Shares listed on the ASX may rise or 

fall due to numerous factors which may affect the 

market performance of Linc Energy, irrespective 

of the Company’s operating performance. These 

factors include: 

• general economic conditions, including 

inflation rates and interest rates; 

• variations in the local and global market for 

listed stocks, in general, or for resource or 

mining and oil stocks, in particular; 

• changes to government policy, 

legislation or regulation; 

• inclusion or removal from major 

market indices; 

• the nature of competition in the industries 

in which Linc Energy operates; and 

• general operational and business risks. 

In particular, the share price of many companies 

have in recent times been subject to fluctuations 

which in many cases may reflect a diverse range 

of non Company specific influences such as 

commodity prices, currency movements, interest 

rates, global hostilities and tensions, acts of 

terrorism and general economic conditions. 

Such market fluctuations may materially and 

adversely affect the market price of the Shares. 

Accordingly, the Shares may trade on ASX 

at higher or lower prices than the Offer Price. 

Similarly, the level of dividends that may be 

paid in the future in respect of Shares can move 

either up or down and it is possible that Linc 

Energy may not pay any dividends. 

No assurances can be given that the Company’s 

market performance will not be adversely 

affected by any such market fluctuations or 

factors. Neither the Company, the Directors 

nor any other person guarantees Linc Energy’s 

market performance. 

Changes in Regulatory Environment 

Changes to laws, regulations and accounting 

standards which apply to Linc Energy from time 

to time could materially and adversely impact 

upon the operating and financial performance 

and cash flows of Linc Energy. 

Changes in the taxation laws of Australia and 

other countries in which the Company has an 

interest could also materially affect operating 

results of the Company. 

General Economic Conditions 

Economic conditions that could impact on 

Linc Energy’s operating costs, profit margins 

and the price of Shares include: 

• movements in the Australian dollar and 

world commodity prices; 

• economic conditions in Australia 

and overseas; 

• movements in domestic and international 

interest rates, inflation and share 

markets; and 

• changes in industrial production impacting 

on commodity demand. 

Share Investment 

Prior to the Offer, there has been no public 

market for the Shares. 

There can be no guarantee that an active market 

in the Shares will develop or that the price of the 

Shares will increase. There may be relatively few 

or many potential buyers or sellers of the Shares 

on the ASX at any time. This may increase the 

volatility of the market price of the Shares. 

It may also affect the prevailing market price at 

which Shareholders are able to sell their Shares.

Commodity Prices 

Linc Energy plans for its source of revenue 

in stages 2 and 3 of its business plan to be 

derived mainly from the sale of diesel or other 

liquid fuel products and possibly through the 

sale of electricity. Consequently, Linc Energy’s 

financial position, operating results and future 

growth will closely depend on the market price 

of each of these commodities. 

Market prices of diesel, liquid fuel products and 

electricity are subject to large fluctuations in 

response to changes in demand and/or supply 

of crude oil and to a lesser extent natural gas 

and various other factors. These changes can be 

the result of uncertainty or several industry and 

macroeconomic factors beyond the control of 

the Company, including actions taken by OPEC, 

political instability, governmental regulation, 

forward selling by producers, climate, inflation, 

interest rates and currency exchange rates. 

If market prices of the commodities sold by 

Linc Energy were to fall below production costs 

for these products and remain at that level for 

a sustained period of time, Linc Energy would 

be likely to experience losses, having a material 

adverse effect on Linc Energy. 

Political Risks 

War, terrorist attacks or hostilities anywhere in 

the world can result in a decline in economic 

conditions worldwide or in a particular region, 

which could produce an adverse effect on 

the business, financial position and financial 

performance of Linc Energy. 

Title to Tenements 

There is a risk Linc Energy may lose title to 

mining tenements if conditions attached to 

licences are changed or not complied with. 

Native Title 

It is possible that a form of native title reflecting 

the entitlement of indigenous inhabitants to 

traditional lands may exist on Linc Energy’s 

tenements. In such cases exploration and/or 

mining restrictions may be imposed or claims 

for compensation could be forthcoming. 

For discussion on these issues, please see the 

Solicitors Report in Section 9 of this Prospectus. 

Exchange Rates 

Linc Energy may be exposed to rapid and 

material movements in exchange rates, in 

particular the A$/US$ exchange rate. 

Adverse movements in exchange rates relating 

to either equity investments or commodities 

or project operating costs, or increased price 

competitiveness in response to movements in 

exchange rates may materially adversely impact 

the operational and financial performance and 

cash flows of Linc Energy. 

Financing and Further 

Funding Requirements 

In undertaking its business (including pursuing 

opportunities for future growth), Linc Energy 

may undertake investments. To finance such 

investments, the Company or a subsidiary or 

associate may incur indebtedness or may seek 

to raise capital. Such actions and the terms on 

which such funding could be obtained may 

have a material adverse impact on the 

Company’s financial position. 

Further, the proposed use of funds, as set out 

in Section 2.11 of this Prospectus may vary 

depending on the progress of the Company’s 

work program, technical studies, business 

development, market prices and availability of 

material and services and general operational 

and logistical risks faced during project 

development. These variations may result in a 

shortfall in funding which will need to be met 

from working capital surpluses, further capital 

raisings or alternative funding sources. 

Stages 2 and 3 of the Company’s business plan 

will require significant further investment of 

capital. There is a risk that the Company may 

not be able to raise such capital and the terms 

of any such further capital raisings are presently 

unknown. Applicants should note that the 

capital raising being undertaken pursuant to this 

Prospectus is to fund stage 1 of the Company’s 

business plan. 


10 risk 

Exploration, Development, 

Mining and Processing Risks 

Mining operations may be hampered by a variety 

of circumstances, which may or may not be 

within the control of the Company. Exploration is 

a speculative endeavour, which may not result in 

finding resources of economic value. 

The business of mineral exploration, project 

development and mining by its nature contains 

elements of significant risk. Ultimate and 

continuous success of these activities is 

dependent on many factors such as: 

• the timing of revenues; 

• the discovery and/or acquisition of 

economically recoverable reserves 

and resources; 

• successful conclusions to bankable 

feasibility studies; 

• access to adequate capital for project 

development; 

• design and construction of efficient mining 

and processing facilities within capital 

expenditure budgets; 

• obtaining consents and approvals necessary 

for the conduct of mining and exploration; 

• access to competent operational management 

and prudent financial administration, 

including the availability and reliability 

of appropriately skilled and experienced 

operators, employees, contractors and 

consultants; and 

• adverse weather conditions over a prolonged 

period can adversely affect exploration 

and mining operations. 

. 00 LINC ENERGY | 2006 PROSPECTUS 

factors (cont) 

Whether or not income will result from projects 

undergoing exploration and development 

programs depends on the successful 

establishment of UCG operations and the 

ability to use UCG Syngas as feedstock for 

GTL and possibly GTG plants. Factors including 

costs, actual revenues, consistency and 

reliability of revenue quality and commodity 

prices affect successful project development and 

mining operations. The resource industry has 

become subject to increasing environmental and 

occupational health and safety responsibility 

and this potential liability is a constant risk. 

Reliance on Key Management 

The responsibility of overseeing the day-to-day 

operations and the strategic management of 

Linc Energy is substantially dependent upon its 

management and its key personnel. There 

can be no assurance given that there will be 

no detrimental impact on Linc Energy if one, 

or a number of these employees cease 

their employment. 

Linc Energy’s future success also depends 

upon its continuing ability to attract and retain 

highly qualified personnel. The ability to attract 

and retain the necessary personnel could have 

a material effect upon Linc Energy’s business, 

results of operations and financial condition. 

Regulatory Licences, 

Approvals and Applicable Laws 

Linc Energy will from time to time require 

various government regulatory approvals for 

its operations and must comply with those 

approvals and applicable laws, regulations 

and policies. In particular, Linc Energy may 

require licences and approvals in relation to 

mining activities, environmental matters and the 

manufacture and supply of gas and electricity. 

There is a risk that Linc Energy may not obtain 

or there may be delay in obtaining the necessary 

licences and approvals or that stringent 

conditions may be imposed on such licences 

and approvals. This may affect the timing and 

scope of work that can be undertaken. Further 

a failure to comply with a licence, approval or 

applicable law may affect the timing and scope 

of work that can be undertaken. 

Environmental Risks 

There is the potential for the UCG 

operations to result in: 

• groundwater contamination; 

• surface subsidence; and 

• productive soil contamination. 

If any of these issues were to arise this could 

have a detrimental affect on Linc Energy’s 

operations. For discussion on these issues 

please refer to the independent environmental 

consultants report prepared by Golder 

Associates, which is included in Section 7 

of this Prospectus.

Operational and Technical Risks 

The successful implementation of Linc Energy’s 

business plan and objectives could be 

adversely affected by the following factors: 

• insufficient coal reserves; 

• inconsistent gas quality; 

• variable gas quantity; 

• interruption in gas supply due to 

underground processing problems; and 

• breach of a supply contract due to 

inconsistent product production. 

If any of these issues were to arise this could 

have a detrimental affect on Linc Energy’s 

operations. For discussion on these issues 

please refer to the independent engineering 

consultants report prepared by Shedden Uhde 

in Section 6 of this Prospectus and the 

independent geologists report prepared 

by Coalsearch Consultants in Section 5 of 


In addition, there is a risk that the Syngas 

produced by UCG may not be able to be 

successfully used as feedstock for GTL plants 

acquired by Linc Energy. If this occurs, Linc 

Energy may require additional capital to 

purchase further plant and equipment to clean 

up the Syngas in order to allow it to be used as 

feedstock for GTL plants. There is no guarantee 

that such additional expenditure will achieve 

the intended result. Further, as the process of 

combining UCG and GTL has not previously 

been attempted on the scale which Linc Energy 

intends to undertake, there may be unforeseen 

technical obstacles to successfully producing 

liquid fuels and electricity using UCG Syngas. 

Industry operating risks include fire, explosions, 

and breakdowns of plant machinery and 

equipment. The occurrence of any of these risks 

could result in legal proceedings being instituted 

against the Company and substantial losses due 

to injury or loss of life, damage to or destruction 

of property, natural resources, regulatory 

investigation, and penalties or suspension of 

operations. Damage occurring to third parties 

may give rise to claims by third parties. 

Technology Risks 

To date, no commercial scale GTL plant 

based on Syntroleum’s technology has been 

constructed. In the event that the Syntroleum 

technology is not suitable for production of 

fuels using UCG Syngas, Linc Energy may 

need to enter into agreements with other 

GTL technology providers in order to obtain 

appropriate technology. There is no guarantee 

that Linc Energy will be able to source such 

technology on favourable terms or at all. 

Intellectual Property Risks 

Linc Energy will be using the intellectual 

property of Ergo Exergy and Syntroleum. 

The ability of those entities to protect their 

intellectual property rights involves complex 

legal, scientific and factual questions and 

uncertainties. Intellectual property rights owned 

by those entities may be challenged by their 

competitors or other third parties. The success 

of such an action may delay or prevent Linc 

Energy from undertaking its business plan. 

Licence Risk 

Linc Energy has entered into an MOU and 

Extension Agreement with Ergo Exergy under 

which Linc Energy obtains access to certain 

of Ergo Exergy’s UCG technology. Under 

those agreements, certain rights expire on 

22 September 2006 unless the Company 

commits sufficient funds to build a commercial 

plant. However, the Extension Agreement 

provides that should the MOU expire, Ergo 

Exergy will negotiate with Linc Energy in good 

faith to agree other arrangements to license Ergo 

Exergy’s UCG technology to Linc Energy. The 

Directors are confident that should the MOU 

expire, they will be successful in negotiating a 

new agreement with Ergo Exergy. 


11 

. . Registration and 

Corporate Structure 

The Company was originally registered in 

Victoria, Australia on 29th October 1996 as a 

public no liability Company. This status was 

changed to a Company limited by Shares on 

17 November 2000. 

.2. Company Tax Status 

The Board expects that the Company will be 

treated as a public Company for Australian 

tax purposes. 

.3. Company Balance Date 

The Company has a balance date of 30 June. 

.4. Share Structure 

The Company only has one class of Shares, 

being fully paid ordinary Shares. On the 

Prospectus Date, the Company has 232,997,383 

Shares on issue. Pursuant to this Prospectus 

Linc Energy will issue a further 88,000,000 

Shares. The Company has also issued 1,000,000 

unlisted $0.25 options to BBY exercisable 

two years from the Listing Date. 


additional information 

Top 20 Shareholders 

Shareholder Shares Held 

Newtron Pty Ltd 201557383 

Innisfree Pty Ltd 7768000 

WK Prospecting P/L 6000000 

Steven Fierro 6000000 

Mark Tomkins ATF Tomkins Trust 2500000 

Transpacific Group P/L 2000000 

Palmhurst P/L 1506500 

Ergo Exergy Tech Inc. 1230000 

Camille Collins 523000 

MJ & AM Ahern 500000 

Rosalie Joice Walker 500000 

Bartlett Holdings P/L 393000 

RY & HN Amaral 325000 

HF & R Holdings P/L 250000 

Genevieve Colling 200000 

Rene Thiel 200000 

John Charles Harkins 200000 

Marketplace Communications Pty Ltd 180000 

Anne Hider 150000 

Blur Investments P/L 100000 

Paul Rundle 100000 

WMAC Pty Ltd 100000 

KE & S Dark 100000

.5. Rights and Liabilities 

Attaching to Shares 

The Shares Offered by this Prospectus are 

ordinary Shares. The rights attaching to them 

include the right to attend and vote at meetings 

of Shareholders, to receive dividends and to 

share in any surplus on a winding up of 

the Company. 

The rights attaching to Shares are set out in 

the Company’s Constitution and may also be 

regulated by the Corporations Act, ASX Listing 

Rules, ASTC Settlement Rules and the general 

law. A summary of the more significant rights 

attaching to Shares as detailed in the Company’s 

Constitution is set below. 

.6. Constitution 

The following is a summary of the more 

significant rights attaching to the Shares as 

set out in the Company’s Constitution. This 

summary is not exhaustive and does not 

constitute a definitive statement of the rights 

and liabilities of Shareholders. To obtain such 

a statement, persons should seek independent 

legal advice. 

Full details of the rights attaching to Shares 

are set out in the Company’s Constitution, a 

copy of which is available for inspection at 

the Company’s registered office during normal 

business hours. The following is a summary of 

the major provisions: 

Voting 

At a general meeting of Linc Energy, every 

ordinary member present in person, or by proxy, 

attorney or representative, has one vote on a 

show of hands and on a poll, one vote for each 

fully paid Share held and in respect of which a 

member may vote. On a poll, partly paid Shares 

confer a fraction of a vote pro-rata to the amount 

paid up on the Share. 

A poll may be demanded by the chairperson of 

the meeting, by any five Shareholders present in 

person, or by proxy, attorney or representative, 

or by any one or more Shareholders who are 

together entitled to not less than 5% of the total 

voting rights of all the Shareholders having the 

right to vote on the resolution on a poll. 

General Meetings 

Each Shareholder is entitled to receive notice of, 

and, except in certain circumstances, to attend 

and vote at general meetings of the Company 

and receive all financial reports, notices 

and other documents required to be sent to 

Shareholders under the Company’s Constitution, 

the Corporations Act or the ASX Listing Rules. 

Dividends 

Subject to any special rights or restrictions 

attaching to a class of Shares, the profits of 

Linc Energy, which the Directors from time to 

time determine to distribute by way of dividend, 

are divisible amongst the Shareholders in 

proportion to the amounts paid up on the Shares 

held by them. 

Issue of Further Shares 

The Directors may (subject to the restrictions on 

the issue of Shares imposed by the Company’s 

Constitution, the ASX Listing Rules and the 

Corporations Act) issue Shares and grant 

options in respect of, or otherwise dispose of 

further Shares on such terms and conditions as 

they see fit. 

Transfer of Shares 

Holders of Shares may transfer them by a proper 

transfer effected in accordance with the ASTC 

Settlement Rules and the ASX Listing Rules and 

as otherwise permitted by the Corporations Act. 

The Directors may refuse to register a transfer 

of Shares where the refusal to register the 

transfer is permitted under the ASX Listing Rules 

or the ASTC Settlement Rules. 

Winding Up 

Subject to any special or preferential rights 

attaching to any class or classes of Shares, 

on a winding up of Linc Energy, any surplus 

assets of the Company will be distributed to 

Shareholders in proportion to the capital paid 

up on the Shares held by them respectively. 

On a winding up of Linc Energy, the liquidator 

may, with the approval of a special resolution, 

distribute among the Shareholders the whole or 

any part of the property of Linc Energy and may 

determine how such division is to be carried out. 

The liquidator may also, with the approval of a 

special resolution, vest the whole or any part of 

the property in trustees on trust for Shareholders 

as the liquidator thinks fit. 

Amendment of the Constitution 

The Corporations Act provides that the 

constitution of a Company may be modified 

or repealed by special resolution passed by 

the members of the Company. Linc Energy’s 

Constitution does not impose any further 

requirements to be complied with to effect a 

modification of its Constitution, or to repeal it. 

Directors 

The details of the powers and duties of Directors 

are contained in the Company’s Constitution. 

Directors’ Indemnity 

The Company, to the extent permitted by law, 

indemnifies each Director, alternate Director, 

Secretary, or executive officer (and any person 

who has previously served in any such capacity) 

against any liability or cost incurred by the 

person as an officer of the Company, or a related 

body corporate of the Company, including 

but not limited to liability for costs incurred 

in defending proceedings in which judgment 

is given in favour of the person or in which 

the person is acquitted. The indemnity may be 

extended to other employees at the discretion of 

the Directors. 

Charitable Trust 

The Board may at its discretion establish a 

charitable trust for charitable and philanthropic 

purposes. In each financial year the Board 

may, having regard to the financial and profit 

performance of Linc Energy, direct 5% of the 

Company’s profits into the charitable trust. 

.7. Material Contracts 

(a) Lead Manager Agreement with BBY 

On 27 September 2005, Linc Energy entered 

into an agreement with BBY under which 

BBY agreed to act as lead manager to the 

Linc Energy initial public Offering of Shares. 

The agreement provides for a mandate period 

ending 30 June 2006, which may be extended. 


11 additional 

Under the agreement, Linc Energy has agreed to 

pay BBY: 

• a capital raising fee of 5% of the total funds 

raised by Linc Energy (except in relation to 

the major cornerstone investors); 

• a management fee equal to 1% of total 

funds raised; 

• corporate advisory fees of $15,000 

per month; and 

• reasonable out of pocket expenses. 

Linc Energy has also agreed to grant BBY 

1,000,000 unlisted $0.25 options in the 

Company exercisable two years from the 

date of listing. 

BBY’s involvement in the mandate is subject to: 

• satisfactory due diligence on Linc Energy; 

• the Directors assisting with the listing process 

by introducing at least 100 Applicants; 

• Linc Energy securing an in-principle 

agreement with a major global oil 

company; and 

• certain escrow agreements being entered into. 

(b) Management Agreement 

with Peter Bond 

The Company has entered into an employment 

agreement with Peter Bond, the Company’s 

Managing Director. 

The agreement provides for an initial term of 

3 years commencing on the date the Company 

is admitted to the Official List of the ASX. 

The agreement is on normal commercial 

terms and provides for the payment of a total 

remuneration package which is commensurate 

with remuneration packages offered to managing 

directors of public companies of a similar size 

and industry grouping as the Company. Upon 

listing of the Company on the ASX, Peter Bond 

will, during the first year of the initial term, 

receive a remuneration of $250,000 per annum 

including superannuation. 


information (cont) 

(c) Ergo Exergy Memorandum of 

Understanding and Extension 

Agreement 

Linc Energy and Ergo Exergy entered into an 

MOU on 23 March 2005. The MOU provides for 

a General Licence and project specific licences 

to be granted by Ergo Exergy to Linc Energy in 

relation to the use of UCG technology. 

General Licence 

Upon payment by Linc Energy of US$1,300,000 

to Ergo Exergy, Ergo Exergy will grant a 

non-exclusive General Licence to Linc Energy. 

A General Licence is a licence to: 

• use and obtain access to UCG technology; 

and; 

• have confidential information transferred, up 

to the stage of detailed design of commercial 

plants. 

On commissioning of a UCG powered 

commercial plant at Chinchilla and the granting 

of the General Licence, Linc Energy will be 

granted a 25 year exclusive General Licence 

for UCG technology in Australia. 

On signing the MOU and payment of US$10,000 

Linc Energy will be granted the Interim Exclusive 

Right (IER). The IER gives Linc Energy the 

exclusive right (in Australia) to acquire the 

General Licence for a period of 6 months and the 

first right of refusal for CTL plants. Linc Energy 

can extend this period for two further 6 month 

periods on payment of US$10,000 per period. 

Linc Energy and Ergo Exergy have entered into 

an agreement to extend the period of the IER to 

22 September 2006. 

During the IER Ergo Exergy agrees to provide 

Linc Energy with interim access to the UCG 

technology and to assist Linc Energy in 

raising funds. 

If during the period of the IER, Linc Energy 

raises AU$20,000,000 for development of a 

commercial plant at Chinchilla, Queensland, 

then on payment of US$490,000 (an instalment 

of the General Licence fee) Linc Energy will be 

granted a Provisional General Licence (PGL). 

Under the PGL Ergo Exergy will transfer to Linc 

Energy certain UCG technology. 

On payment of the balance of the General 

Licence fee (US$800,000) (which must be paid 

not later than 30 days after commissioning of a 

UCG powered commercial plant at Chinchilla, 

Queensland), Linc Energy will be granted the 

General Licence. Upon the grant of the General 

Licence, Ergo Exergy will complete the transfer 

of technology under General Licence nonspecific 

to the plant at Chinchilla. 

Chinchilla Plant Project Licence 

The Project Licence for the UCG powered 

commercial plant at Chinchilla, Queensland 

will be granted on Linc Energy raising 

AU$20,000,000 for development of a 

commercial plant, Linc Energy paying the full 

General Licence fee of US$1,300,000 and paying 

the first US$1.00 of project royalties. The Project 

Licence fee payable is US$2.00 and a royalty 

of US$0.05/GJ (not exceeding A$0.07/GJ) is 

payable. The transfer of technology under this 

licence will be complete with full operational 

manuals and instructions for operating a gas 

production plant, to the extent that participation 

of Ergo Exergy’s personnel in the plant’s 

operations will no longer be required. 

Project Licences for Other Plants 

Project Licences for other plants will be for a fee 

not exceeding US$1,000,000 and royalties will 

be payable. 

Extension Agreement 

Linc Energy and Ergo Exergy entered into an 

agreement on 8 March 2006 to extend the period 

of the IER under the MOU until 22 September 

2006. Under the terms of that agreement, the 

parties acknowledge that while the PGL will not 

be triggered until Linc Energy commits sufficient 

funds to a commercial plant, Ergo Exergy will 

negotiate in good faith with Linc Energy to 

agree upon other arrangements for the licensing 

of Ergo Exergy’s UCG technology to Linc Energy 

if required.

(d) Memorandum of Agreement 

between Linc Energy and 

Syntroleum International 

Corporation 

On 15 August 2005 Linc Energy signed a 

Memorandum of Agreement with Syntroleum 

in which the parties agree to negotiate in good 

faith definitive agreements for the technology 

demonstration, commercial project development, 

construction and operation of a CTL plant. 

Technology Demonstration 

• Phase 1 

Syntroleum intends to demonstrate certain 

aspects of its CTL technology under conditions 

expected for a commercial CTL project which 

testing will involve laboratory testing. The cost 

of this testing is estimated to be US$500,000. 

Linc Energy may either pay Syntroleum half 

of the total expenses incurred by Syntroleum 

up to a maximum of US$250,000 or provide 

Syntroleum with a detailed report on a similar 

CTL technology demonstration program. 

• Phase 2 

Syntroleum intends to conduct a further program 

to demonstrate the CTL technology at bench 

scale level. Linc Energy will either contribute 

up to US$500,000 to reimburse Syntroleum 

for the costs of the bench scale tests or work 

together with Syntroleum to obtain alternative 

third party funding. 

Linc Energy and Syntroleum agree to jointly 

evaluate the need for a further phase to 

demonstrate CTL technology at the bench 

scale level using Syngas produced at Chinchilla. 

If such program proceeds, Linc Energy will 

pay 50% of the cost of the program up to the 

maximum amount of US$750,000. 

• Phase 3 

The parties have agreed to jointly evaluate the 

need for a third phase to demonstrate the CTL 

technology at the pilot plant scale of nominally 

2 barrels per day. Linc Energy agrees to 

apportion up to AU$5,000,000 from a capital 

raising to cover the cost of constructing and 

operating the pilot plant for a period of 1 

year. Syntroleum will contribute the use of its 

detailed engineering designs obtained from its 

involvement at another pilot plant at no cost to 


In consideration for Linc Energy funding phase 

3, Syntroleum will provide Linc Energy up 

to US$1,500,000 credit against the payment 

required for a site licence to use the CTL 

technology to operate a 17,000 bpd CTL 

plant at Chinchilla. The credit will expire after 

3 years from the completion of phase 2 unless 

an extension is otherwise agreed by Syntroleum. 

Site Licence Agreement 

The parties must execute a site licence 

agreement by 30 June 2006. That agreement 

is intended to include terms to maintain the 

exclusive site reservation to operate a 17,000 

bpd CTL plant at Chinchilla for up to 2 years 

provided that Linc Energy is funding the ongoing 

technology demonstration program or paying 

a minimum of US$500,000 per year for up to 

a total of 3 years’ extension. 

Technology Services Agreement 

The MOA contemplates a separate technology 

services agreement being entered into under 

which Syntroleum will provide engineering and 

other services on a time and material basis. 

Equity Participation in Chinchilla Project 

Linc Energy will grant Syntroleum a first right 

of refusal to invest at least 25% and up to a 

maximum of 50% of the equity in stage 2 of 

Linc Energy’s business plan on the same 

terms as offered to other third party investors. 

Subsequent Projects 

Syntroleum will commit to issue additional 

site licences to Linc Energy to use the CTL 

technology for multiple use UCG–CTL projects 

(other than in China) with a primary focus on 

Queensland under the same general terms of 

the site licence for the 17,000 bpd CTL plant 


(e) Memorandum of Understanding 

between Linc Energy and a major 

global oil company 

On 1 December 2005 Linc Energy entered into 

a memorandum of understanding with a major 

global oil company. Although the MOU is 

non-binding, it allows for a 6 month period of 

commercial discussions to proceed around the 

purchase of syn-diesel, considering terms of 

agreement such as specification, pricing 

and delivery. 

(f) Deed with Newtron Pty Ltd 

On 8 March 2006 the Company entered 

into a deed with Newtron Pty Ltd, an entity 

associated with Mr Peter Bond, in relation to 

funds that Newtron Pty Ltd has advanced to 

the Company. Under the terms of the deed, the 

Company acknowledges a debt in the amount of 

$1,600,000 it owes to Newtron Pty Ltd. Newtron 

Pty Ltd agrees to relinquish any rights it may 

have under any agreements it has entered into 

with the Company that allow it to convert debt 

it is owed by the Company into Shares in 

the Company. 

(g) Option Agreement 

Linc Energy has entered into an option 

agreement to acquire the land known as 

“Capowie” on which MDL 309 is included. The 

option agreement expires on 21 June 2006 and 

allows Linc Energy, at its election, to acquire the 

property for $1,750,000. 

(h) Directors’ Indemnities, Access 

and Insurance 

The Company has entered into Deeds of 

Indemnity, Access and Insurance with each of its 

Directors. The Deeds provide that: 

• to the extent permitted by the Corporations 

Act, and subject to certain other qualifications, 

to the extent that a Director is not otherwise 

indemnified, the Company indemnifies the 

Director against all costs, expenses and 

liabilities incurred in the capacity of an 

officer of the Company or any wholly-owned 

subsidiary; 

• the Company must use its best endeavours 

to insure the Director under a Directors’ and 

Officers’ liability insurance policy against 

liability incurred as an officer of the 

Company; and 

• the Company must make Board papers 

available to the Director for use in exercising 

powers and discharging duties as an officer 

of the Company, and in defending any claim 

brought against the Director in relation to acts 

or omissions of the Director in that capacity. 


11 additional 

.8. Employee Share Plan 

The Company has established an Employee 

Share Plan (ESP) with the following key features: 

Operation of the ESP 

The ESP commences on a date determined by 

the Board, and is to be managed by the Board 

in accordance with the rules of the ESP (Rules), 

which bind the Company, each subsidiary 

(as defined in the Corporations Act) of the 

Company, the custodian selected by the Board 

to administer the ESP and each participant 

who accepts an offer to participate under the 

ESP (Participating Employee). The ESP may 

be suspended or terminated at any time at the 

discretion of the Board. 

Eligibility 

The Board may, subject to the Rules, Offer 

Shares for subscription or acquisition under the 

ESP to any full-time and part-time employee of 

the Company or any subsidiary of the Company 

(Qualifying Employee) selected by the Board. 

Limits on Number of Shares Offered 

The number of Shares offered under the ESP 

when aggregated with: 

(a) Shares which would have been issued 

under each outstanding offer or Option 

(if it was accepted or exercised) pursuant 

to an employee incentive scheme; and 

(b) Shares issued during the previous 5 years 

pursuant to an employee incentive scheme, 

must not exceed 5% of the total number of 

issued Shares in the Company as at the time 

of the offer. 

No Qualifying Employee may accept an offer of 

Shares under the ESP if, immediately after the 

acquisition of the Shares the subject of the offer, 

the Qualifying Employee would: 

(a) hold a legal or beneficial interest in more 

than 5% of the Shares in the Company; or 

(b) be in a position to cast, or control the casting 

of, more than 5% of the maximum number 

of votes that might be cast at the general 

meeting of the Company. 



Ranking of Shares 

Subject to the rules of the ESP, Shares issued 

under the ESP will rank equally in all respects 

with all existing Shares from the date of 

allotment including in relation to: 

(a) voting rights; and 

(b) entitlements to participate in 

distributions and dividends and 

future rights and bonus issues. 

Restrictions on Disposal 

Participating Employees must not sell, transfer 

or otherwise dispose of any Shares issued or 

transferred to the Participating Employee under 

the ESP until the earlier of 3 years after issue of 

those Shares or cessation of employment with 

the Company. 

.9. Employee Option Plan 

The Company has established an Employee 

Option Plan (EOP) with the following key 

features: 

Eligibility 

The Board may issue Options under the 

EOP to any employee of the Company and 

its subsidiaries, including executive directors 

and non-executive directors. 

General Terms of the Options 

Options will be issued free of charge, unless the 

Board determines otherwise. Each Option is to 

subscribe for one Share and, when issued, the 

Share will rank equally with other Shares. 

The Options are not transferable. 

Quotation of the Options on the ASX will not be 

sought, but the Company will apply to the ASX 

for official quotation of Shares issued on the 

exercise of Options. Options may be granted 

subject to conditions specified by the Board 

which must be satisfied before the Option can 

be exercised. 

Exercise of Options 

Unless the terms on which an Option was 

Offered specify otherwise, an Option may be 

exercised at any time after two years from the 

date it is granted, provided the employee is still 

employed by the Company. 

An Option may also be exercised in special 

circumstances, that is, at any time within 

6 months after the employee’s death, total 

and permanent disablement, retirement, 

or retrenchment. An Option lapses upon 

termination of the employee’s employment by 

the Company and, unless the terms of the offer 

of the Option specify otherwise, lapses five years 

after the date upon which it was granted. 

Exercise Price 

The exercise price per Share for an Option will 

be the amount determined by the Board at the 

time of the grant of the Option. 

New Issues of Securities 

Optionholders will not be entitled to participate 

in any new issue of securities in the Company 

unless they exercise their Options prior to the 

record date for the determination of entitlements 

to the new issue. 

Bonus Issues 

If the Company makes a bonus issue of 

securities to the Shareholders, each unexercised 

Option will, on exercise, entitle its holder to 

receive the bonus securities as if the Option had 

been exercised before the record date for the 

bonus issue. 

Rights Issue 

If the Company makes a pro-rata rights issue of 

Shares for cash to its ordinary Shareholders, the 

exercise price of unexercised Options is adjusted 

to reflect the diluting effect of the issue. 

Capital Reorganisations 

If there is any reorganisation of the capital of 

the Company, the number of Options and their 

exercise price will be adjusted in accordance 

with the Listing Rules.

Limit on Number of Options 

The maximum number of Options on issue 

under the EOP must not at any time exceed 

7.5% of the total number of Shares on issue 

at that time. 

. 0. Dividend 

Reinvestment Plan 

The Company has established a Dividend 

Reinvestment Plan (DRP) under which 

Shareholders of the Company may reinvest 

all or part of their dividends in further Shares. 

The DRP has not yet been made operative. 

The following are the key features of the DRP. 

Participation 

Participation in the DRP is optional. 

A Shareholder may participate in the DRP 

in respect of all of its Shares or in respect 

of some only. 

Participating Shareholders may terminate 

their participation or increase or decrease the 

number of Shares participating under the DRP. 

The Directors may decline to accept an 

application to participate in the DRP if, in 

their opinion, the laws of Australia or another 

country makes the Shareholder’s participation 

in the DRP illegal, impractical, or undesirable. 

Operation of the DRP 

Under the DRP, each cash dividend, which 

would otherwise be payable to a participating 

Shareholder on participating Shares, will be 

applied to a subscription for additional Shares. 

Fractional entitlements will be rounded up. 

Shares issued to participating Shareholders 

under the DRP will rank equally with existing 

Shares and the Company will apply for Shares 

allotted under the DRP to be quoted on the ASX. 

Share Price 

Shares issued under the DRP will be issued at a 

price which is 100% (or such lower percentage 

as the Directors may resolve, but which may 

not be less than 95%) of the average sale price 

(rounded to the nearest cent) of all Shares sold 

on the ASX on the date the Company’s share 

register is closed to determine the entitlement to 

a dividend and the four trading days immediately 

preceding that date. 

No brokerage, commission or other transaction 

costs will be payable by participating 

Shareholders on Shares issued under the DRP. 

Alteration, Suspension or Termination 

The Directors may alter, suspend or terminate 

the DRP at any time by giving notice to 

Shareholders. 

. . Interests of People Involved 

in the Offer 

(a) Interests of people involved in 

the Offer 

Other than as set out below or elsewhere in this 

Prospectus, no Director or proposed Director of 

the Company or professional or promoter of the 

Company or stockbroker to the issue holds at 

the date of this Prospectus, or held at any time 

during the last 2 years, any interest in: 

• the formation or promotion of the 

Company; or 

• property acquired or proposed to be acquired 

by the Company in connection with its 

formation or promotion or the Offer of the 

Shares; or 

• the Offer of the Shares. 

Other than as set out below or elsewhere in 

this Prospectus no amounts have been paid 

or agreed to be paid by any person and no 

benefits have been given or agreed to be given 

by any person: 

• to a Director or proposed Director of the 

Company to induce him to become, or to 

qualify as, a Director of the Company; or 

• for services provided by a Director or 

proposed Director of the Company or 

professional or promoter of the Company 

or stockbroker to the issue in connection 

with the formation or promotion of the 

Company or the Offer of the Shares. 

(b) Directors’ Emoluments 

Director 

Mr Brian 

Johnson 

July 03 – 

30 June 04 

July 04 – 

30 June 05 

1 Mr Peter Bond has other interests in the 

Company which he received through 

Newtron Pty Ltd, a company with which he 

is associated. These are detailed elsewhere 

in this Prospectus. 

2 Mr John Harkins is associated with Facilitec 

Pty Ltd. Facilitec Pty Ltd has been paid the 

amounts indicated for management consulting 

services provided by Mr John Harkins. 

(c) Shareholding Qualifications 

The Directors are not required to hold any 

Shares in the Company under the Constitution. 

(d) Remuneration of Directors 

The Company’s Constitution provides that the 

Directors are entitled to such remuneration 

as the Directors determine, however, the 

remuneration of non-executive Directors must 

not exceed in aggregate a maximum amount 

fixed by the Company in a general meeting for 

that purpose. 

The Company has resolved in a general meeting 

to fix the maximum annual remuneration for 

Non-Executive Directors at $250,000. 

July 05 – 

Prospectus 

Date 

– – – 

Mr Peter 

Adam Bond 1 – 291,500 212,000 

Mr John 

Charles Harkins 2 – 61,600 53,900 

Mr Ken Dark – – – 


11 additional 

A Director may be paid fees or other amounts 

as the Directors determine where a Director 

performs special duties or otherwise performs 

services outside the scope of the ordinary duties 

of a Director. A Director may also be reimbursed 

for out of pocket expenses incurred as a result 

of their directorship or any special duties. 

The Board has resolved that the Chairman be 

paid remuneration at the rate of $50,000 per 

annum and other Non-Executive Directors at the 

rate of $40,000 per annum plus superannuation. 

Peter Bond will receive a salary and other 

benefits as employee of the Company as set 

out in Section 11.7 of this Prospectus. 

Facilitec Pty Ltd, a company associated with 

Mr John Harkins, will continue to provide 

management consulting services to Linc Energy. 

(e) Directors’ Shareholdings 

Set out below are details of the interests of the 

Directors in the securities of the Company at the 

date of this Prospectus. Interests include those 

held directly and indirectly. 

Director Ordinary Shares 

Mr Brian Johnson 2,000,000 

Mr Peter Bond 201,557,383 

Mr John Harkins 200,000 

Mr Ken Dark 100,000 

(f) Interests of Directors 

On 6 August 2004, Newtron Pty Ltd, an entity 

associated with Mr Peter Bond acquired a debt 

of $3,463,406 owed by Linc Energy. Pursuant to 

agreements that were entered into with creditors 

of Linc Energy, which agreements were assigned 

to Newtron Pty Ltd on 6 August 2004, Newtron 

Pty Ltd obtained the right to convert debt owed 

by Linc Energy into equity in Linc Energy at 

conversion rates of 3 and 4 cents per Share. In 

the 2 years prior to the Prospectus Date Newtron 

Pty Ltd has advanced funds to Linc Energy and 

has invoiced Linc Energy for services provided 

as follows: 



• Newtron Pty Ltd has made direct and indirect 

cash advances in the amount of $2,493,791; 

• Newtron Pty Ltd has invoiced Linc Energy 

$503,500 in relation to services provided by 

Mr Peter Bond; 

• Newtron Pty Ltd has invoiced Linc Energy an 

amount of $458,557 for management staff and 

other staff provided to Linc Energy; and 

• interest of $800,667 has accrued to Newtron 

Pty Ltd in relation to funds owed by Linc 

Energy to Newtron Pty Ltd. 

Accordingly, prior to the Prospectus Date, Linc 

Energy owed Newtron Pty Ltd $7,719,921. Of 

that amount, $6,119,921 was converted into 

203,997,383 Shares in the Company. The 

remaining $1,600,000 will be repaid to Newtron 

Pty Ltd out of funds raised pursuant to this 

capital raising. 

Pursuant to a deed entered into between the 

Company and Newtron Pty Ltd, which is detailed 

in Section 11.7 of this Prospectus, Newtron Pty 

Ltd is not able to convert any further debt 

owed to it by the Company into Shares in 

the Company. 

(g) Deed of Charge 

Newtron Pty Ltd holds a fixed and floating 

charge over the assets of the Company to secure 

its existing loans to the Company. Newtron Pty 

Ltd and the Company have entered into a deed 

pursuant to which Newtron Pty Ltd has agreed 

to release the charge upon repayment of the 

$1,600,000 outstanding debt. 

(h) Interests of Professionals 

BBY Limited has been appointed Manager to the 

issue and will be paid fees pursuant to the lead 

manager agreement, which is summarised in 

Section 11.7 of this Prospectus. The Company 

has agreed to pay BBY Limited the amounts 

referred to in Section 11.7 for these services. 

BDO has prepared the investigating accountant’s 

report on historical and adjusted historical 

financial information included in this 

Prospectus. BDO has also performed due 

diligence enquiries in relation to historical and 

adjusted historical financial information. 

The Company has agreed to pay BDO $27,500 

inclusive of GST for such services provided 

in the two years prior to the Prospectus Date. 

Further amounts may be paid to BDO in 

accordance with its usual time based charge 

out rates. 

TressCox Lawyers has acted as legal adviser to 

the Company in connection with the Offer, has 

drafted a solicitor’s report to be included in this 

Prospectus and has performed work in relation 

to the due diligence enquiries on legal matters. 

The Company has agreed to pay $240,000 

inclusive of GST for such services provided 

in the two years prior to the Prospectus Date. 

Further amounts may be paid to TressCox 

Lawyers in accordance with agreed time based 

charge out rates. 

Coalsearch Consultants Pty Ltd has prepared 

the independent geologist’s report included in 

this Prospectus. The Company has agreed to pay 

Coalsearch Consultants Pty Ltd approximately 

$19,000 (including GST). 

Shedden Uhde Australia Pty Ltd has prepared 

the independent technical consultant’s report 

included in this Prospectus. The Company has 

agreed to pay Shedden Uhde Australia Pty Ltd 

approximately $70,000 (including GST). 

Golder Associates Pty Ltd has prepared an 

independent environmental report included in 

this Prospectus. The Company has agreed to 

pay Golder Associates Pty Ltd approximately 

$9,000 (including GST). 

RS Consult has prepared the independent GTL 

consultant’s report included in this Prospectus. 

The Company has agreed to pay RS Consult 

approximately $18,000. 

. 2. Consents 

Written consents to the issue of this Prospectus 

have been given and at the time of lodgement 

of this Prospectus with ASIC had not been 

withdrawn by the following parties: 

• BBY Limited has given and not withdrawn 

prior to the lodgement of this Prospectus 

with ASIC, its written consent to be named 

in this Prospectus as Manager to the Offer 

in the form and context so named.

• BDO has given and not withdrawn prior 

to the lodgement of this Prospectus with 

ASIC its written consent to be named in this 

Prospectus as investigating accountant to 

the Company as to historical and adjusted 

historical financial information and to the 

inclusion of its Independent Accountant’s 

Report in Section 4 of this Prospectus. 

• TressCox Lawyers has given and not 

withdrawn prior to the lodgement of 

this Prospectus with ASIC its written 

consent to be named in this Prospectus 

as the Company’s legal adviser and to the 

inclusion of the Solicitor’s Report in Section 

9 of this Prospectus in the form and context 

to which it is included. 

• Link Market Services Limited has given and 

not withdrawn prior to the lodgement of this 

Prospectus with ASIC, its written consent to 

be named in this Prospectus as the Share 

Registrar in the form and context in which it 

is so named. 

• Coalsearch Consultants Pty Ltd has 

consented to the inclusion of the 

independent geologist’s report in Section 5 

of this Prospectus in the form and context 

in which it is included and to extracts from 

that report to be included in Section 2 of 

this Prospectus, in the form and context in 

which they are included. 

• Shedden Uhde Australia Pty Ltd has 

consented to the inclusion of the 

Independent Engineer’s Report in Section 6 

of this Prospectus in the form and context 

in which it is included and to extracts from 

that report to be included in Section 2 of 

this Prospectus, in the form and context in 

which they are included. 

• Golder Associates Pty Ltd has consented to 

the inclusion of the environmental report in 

Section 7 of this Prospectus in the form and 

context in which it is included. 

• RS Consult has consented to the inclusion 

of the independent gas to liquids report in 

Section 8 of this Prospectus in the form 

and content in which it is included and to 

extracts from that report to be included in 

Section 2 of this Prospectus, in the form 

and context in which they are included. 

. 3. Expenses of the Offer 

The total estimated costs in connection with 

the Offer (including advisory, legal, accounting, 

tax, listing and administrative fees, as well 

as printing, advertising and other expenses) 

are currently estimated to be approximately 

$608,000 plus fees payable to the Manager to 

the Offer as referred to in Section 11.7 of this 

Prospectus. 

At the close of the Offer the total estimated 

costs would be approximately $1,500,000. 

. 4. Litigation 

So far as the Directors are aware, there is no 

current or threatened civil litigation, arbitration 

proceeding or administrative appeal or criminal 

or governmental prosecution of a material nature 

in which the Company is directly or indirectly 

concerned which is likely to have a material 

adverse impact on the business or financial 

position of the Company. 

. 5. Documents Available 

for Inspection 

Copies of the following documents are available 

for inspection during normal office hours, free of 

charge, at the registered office of the Company, 

for 12 months after the date of this Prospectus: 

• the Constitution of the Company; and 

• the Consents referred to in Section 11.12 



12 

The Directors report that since the date of the 

financial statements used in the preparation 

of the independent accountant’s report dated 

6 March 2006 to the date of the Prospectus, 

they have not become aware: 

(a) of any circumstances which in their opinion 

materially have affected or will affect the 

proposed assets of the Company; 

(b) of any contingent liabilities of the Company; 

(c) of any material items, transactions or 

events subsequent to the preparation of the 

pro-forma statement of assets and liabilities 

set out in Section 4 of the Prospectus which 

require adjustments to that statement or to 

the independent accountant’s report or 

which could cause the figures disclosed 

in this Prospectus to be misleading or 

deceptive; and 


directors’ statement and signing 

(d) of any material items, transactions or events 

which, although they do not relate to figures 

included in this Prospectus, would cause 

reliance on the figures in this Prospectus 

to be misleading or deceptive. 

The Directors further report that after making 

all enquiries which in their opinion were 

reasonable, they believe: 

(a) that every statement in this Prospectus not 

purporting to be made on the authority of 

an expert or of a public official, document or 

statement is true and not misleading 

or deceptive; 

(b) that every statement in this Prospectus 

purporting to be a statement made by an 

expert or contained in what purports to be a 

copy of or extract from a report or evaluation 

of an expert fairly represents the statement 

or is a correct and fair copy of or extract 

from the report and that the person making 

the statement was competent to give it, has 

consented to the issue of this Prospectus 

and has not withdrawn that consent before 

lodgement of this Prospectus at ASIC; and 

This Prospectus has been signed by or on behalf of the Directors of the Company 

in accordance with section 351 of the Corporations Act. 

Mr Peter Bond 

Managing Director of Linc Energy Limited 

(c) that every statement in this Prospectus 

purporting to be a statement made by an 

official person or contained in what purports 

to be a copy of or extract from a public 

official document is a correct and a fair 

representation of the statement or a 

correct and fair copy of or extract from 

the document.

“UCG field, Chinchilla, Queensland.” 


13 

glossary 

Words, Definitions, Acronyms And Units Referred 

To And/Or Used In This Prospectus. 

$, Dollars, A$ or cents Australian dollars or cents (as appropriate) 

% percent 

°C temperature, degrees celsius 

ACARP (2001a) 

Australian coal association research program case study B04 

– electricity from integrated gasification combined cycle (IGCC) 

Australian coal association research program case study 

ACARP (2001b) B20– electricity production using underground coal 

gasification (UGC) 

AGC-21 advanced gas conversion for the 21st century 

AGR acid gas removal 

ANZECC 

the Australian and New Zealand Environment and 

Conservation Council 

Applicant(s) 

person(s) who submit(s) a valid Application for Shares 

pursuant to this Prospectus 

Application(s) 

an application for Shares in the Offer made by an Applicant in 

an Application Form 

a form attached to or accompanying this Prospectus (including 

Application Form(s) the electronic form in the on-line Prospectus) pursuant to 

which Applicants may apply for Shares 

Application Monies 

the amount accompanying an Application Form submitted by 

an Applicant 

Application Price $0.25 for each Share applied for 

ARC Linkage Grant A grant provided by the Australian Research Council 

Ash inorganic residue obtained from coal after burning 

ASIC Australian Securities & Investments Commission 

Associate 

A party who is associated to a person or company within the 

meaning of “associate” in Section 9 Corporations Act 2001 

ASTC 

ASX Settlement and Transfer Corporation Pty Limited 

(ACN 008 504 532) 

ASTC Settlement Rules the settlement rules of ASTC 

ASX 

Australian Stock Exchange Limited 

(ACN 008 624 691) 

ASX Listing Rules the official listing rules of Australian Stock Exchange 

ASX Corporate 

Governance Council’s 

Principles of Good 

Corporate Governance 

and Best Practice 

Recommendations 

the ASX guidelines outlining the Principles of Good 

Corporate Governance and Best Practice Recommendations 

Audit Committee audit committee of Linc Energy 

Bar pressure (1 Bar = 100 kPa) 

Basement 

means the lower limit of a sedimentary rock sequence, 

usually composed of significantly older rocks 

BBY BBY Limited (ACN 006 707 777) 

Betts Creek Upper 

(BCU) 

Betts Creek Upper and relates to Coal Measures being 

barren strata overlain by Triassic Warang sandstone as 

described in Section 5 of this Prospectus 

Betts Creek Lower 

Coal Measures being barren zone as described in Section 5 

of this Prospectus 

Board the Board of Directors of Linc Energy 

Boonderoo Beds 

Coal Measures being underlying formation as described 

in Section 5 of this Prospectus 

BDO BDO Chartered Accountants and Advisers 

bpd barrels per day 

BTU british thermal units (1,055 gigajoules) 

BTEX compounds Benzene, Toluene, Ethylbenzene, and Xylenes compounds 

Business Day 

has the same meaning given to that term in the ASX 

Listing Rules 

CBM Coal Bed Methane 

CC combined cycle 

Cetane number fuel ignition quality (diesel) 

. 2 


Centre of Applied Engineering Research at the University 

CAER 

of Kentucky, Lexington, Kentucky, USA 

Chairman The chairman of the board 

Clearing House Electronic Sub-register System operated by 

CHESS 

ASX Settlement and Transfer Corporation Pty Limited 

(ACN 008 504 532) 

the date on which the Offer closes, being 27 April 2006 in 

Closing Date respect of the Offer. This date may be varied (for example, 

brought forward) without prior notice by Linc Energy Ltd 

gas, mainly methane which is contained both in the pore 

Coal Bed Methane 

space and also by adsorption in coal seams 

strata or stratigraphic units containing Coal beds and 

Coal Measures are divided into BCU, PU, PI, PL, Betts Creek Lower and 

Boonderoo Beds as described in Section 5 of this Prospectus 

refers to that portion of a deposit in such form and quantity 

that there are reasonable prospects for eventual extraction. 

The location, quantity, quality geological characteristics 

and continuity of a Coal Resource are known, estimated or 

interpreted from specific geological knowledge. Coal Resources 

Coal Resource(s) 

are subdivided in order of increasing geological confidence 

into Inferred, Indicated and Measured categories. The Coal 

Resources estimated and presented in this Prospectus comply 

with the definition of Coal Resources as defined in 

“The JORC Code” 

Coalsearch Consultants Coalsearch Consultants Pty Ltd 

Coalsearch Consultants the Independent Geologist Report prepared by Coalsearch 

Report 

Consultants that appears in Section 5 of this Prospectus 

Coal to Liquid the process of converting coal into liquid fuels 

Company Linc Energy Ltd (ACN 076 157 045) 

Constitution the Constitution of the Company 

Corporate Directory the directory on the inside back cover of this Prospectus 

Corporations Act the Corporations Act 2001 (Cth) 

CO means carbon monoxide 

CO2 carbon dioxide 

CRIP controlled retraction of ignition point technique 

CTL Coal to Liquid 

Crucible swelling No 

or Index 

CSIRO 

an empirical test which involves rapid heating of powdered 

coal in a crucible and the resultant coke button compared to 

a standard profile 

means the Commonwealth Scientific and Industrial 

Research Organisation 

d means day 

Depletion 

means the measure of quantity of ore previously extracted from 

an ore body 

Director(s) means the Directors of Linc Energy Ltd 

Dirt band see parting 

Dividend Reinvestment Means the dividend reinvestment plan of Linc Energy as 

Plan 

detailed in Section 11 of this Prospectus 

records from the Department of Mines and Energy which has 

DME Records the same meaning as the State of Queensland Department 

of Natural Resources, Mines and Water 

DRP Dividend Reinvestment Plan 

EIS environmental impact statement 

Electric logs has the same meaning as Wireline Logs 

Environmental Report the environmental report by Golder Associates Pty Ltd 

Environmental 

Management Plan 

a plan required by the EPA which details a range of 

environmental conditions that must be complied with in 

relation to exploration activities. 

Employee Options Plan the employee options plan of Linc Energy as detailed in 

(EOP) 

Section 11 of this Prospectus 

EPA environmental protection agency 

Ergo Exergy Ergo Exergy Technologies Inc 

ESP 

the employee share plan of Linc Energy as detailed in 


EST Eastern Standard Time (Australia) 

Executive Director an executive director of the Company 

Exploration Permit for means a permit to explore for coal granted by the 

Coal (EPC) 

Queensland Department of Natural Resources and Mines 

Fault 

a fracture surface along which appreciable displacement has 

taken place 

FCC Fluid Catalytic Cracking

FEED phase 

front end engineering design phase of large GTL projects 

as described in Section 6 of this Prospectus 

Felspatho-lithic 

Adj. describes sandstone which contains dominantly 

felspar and rock fragments as its main grain components 

the remaining solid, combustible matter expressed as a 

Fixed carbon percentage, after the removal of ash, volatile matter and 

moisture from coal by pyrolysis 

Float-sink 

the test method which separates fractions of crushed coal 

into successive ranges of Relative Density. 

Floor the layer of rock immediately below a coal seam 

Fluviatile pertaining to a river or rivers 

Ft foot 

F-T Fischer-Tropsch 

Fischer –Tropsch the process of converting Syngas more particularly 

Process 

described in 2.6.2 of this Prospectus 

Gas To Liquids (GTL) the process of converting gas into liquid fuels 

Gas Turbine Generator 

(GTG) 

an electricity generator that uses gas as feedstock 

GE the General Electric Company 

General Licence a licence to use Ergo Exergy’s technology 

Geosyncline 

an elongate gradually subsiding downwarp in the earth’s 

crust, filled with sediment 

Geotechnical 

the application of geological and engineering principles to 

excavation and rock stability 

Glossary the glossary included in Section 13 of this Prospectus 

Golder Associates Golder Associates Pty Ltd 

Golder Associates the Independent Environmental Report prepared by Golder 

Report 

Associates that appears in Section 7 of this Prospectus 

GGE greenhouse gas emissions 

GT gas turbine 

Guidelines 

the Australian Guidelines for the estimating and reporting of 

inventory coal, coal resources and coal reserves March 2003 

HC hydrocarbon 

HCN hydrogen cyanide 

Hg mercury 

H2 hydrogen 

HIN holder identification number 

Historical Financial 

Information 

the statement of financial performance and summary of cash 

flows for the 2005 financial year as set out in Section 4 of this 

Prospectus 

HRSG heat recovery steam generator 

ILUA indigenous land use agreements 

IFRS international financial reporting standards 

IGCC integrated gasification combined cycle 

the moisture retained by a coal sample after it has attained 

Inherent moisture approximate equilibrium with the atmosphere to which it 

is exposed 

Intracratonic 

referring to basin, a basin or repository for sediment occurring 

between or adjacent to a large continental rock mass 

Investigating the Investigating Accountant’s Report on historical financial 

Accountant’s Report information, as detailed in Section 4 prepared by BDO 

Independent 

the environmental performance report prepared by Golder 

Environmental Report Associates contained in Section 7 of this Prospectus 

Independent Geologist the coal properties report prepared by Coalsearch Consultants 

Report 

Pty Ltd contained in Section 5 of this Prospectus 

Independent Technical the technical engineers report prepared by Shedden Uhde Pty 

Engineer’s Report Ltd as contained in Section 6 of this Prospectus 

Independent Gas to 

Liquids Consultant 

Report 

the gas to liquids report prepared by RS Consult as contained 


refers to the Coal Resources classified as Indicated Resources 

Indicated Coal Resource which comply with The Guidelines and as set out in Section 5 


refers to the Coal Resources as classified under the JORC 

Indicated Resource Code and The Guidelines and as set out in Section 5 of this 

Prospectus 


Inferred Resources Code and The Guidelines and as set out in Section 5 of this 

Prospectus 

Isopach 

a line drawn on a map through points of equal true thickness of 

a designated stratigraphic unit eg coal seam 

Issue the issue of Shares in accordance with this Prospectus 

Issue Shares 

Shares that are to be issued by Linc Energy under this 

Prospectus 

JORC Australasian joint ore reserves committee 

JORC Code 

the Australasian Code for Reporting of Exploration Results, 

Mineral Resources and Ore Reserves 

JORC Compliant compliant with the provisions of the JORC Code 

kg kilogram 

kJ kilojoule 

km kilometre 

kPa kilopascal 

kPag kilopascal gauge 

kWh kilowatt per hour 

Lateritised 

the process involving leaching of iron and aluminium from a 

rock with subsequent deposition at a deeper level 

LHV means lower heating value 

Linc Energy and Linc Linc Energy Ltd (ACN 076 157 045) 

Linc Energy Coal means mining tenements in which Linc Energy 

Tenements 

has an interest 

Listing Date the date when the Company is admitted to the Official List 

LCV low calorific value 

LNG liquefied natural gas 

LPG(s) liquefied petroleum gas(es) 

m metre 

Managing Director Managing Director of Linc Energy 

Manager BBY Limited (ACN 006 707 777) 

Marketable Parcel a parcel of shares which has a market value of $500 or more 


Measured Resource Code and The Guidelines and as set out in Section 5 of this 

Prospectus 

MDEA methyldiethanolamine 

MDQ mines department Queensland 

MDL mining development licence 

mg milligram 

MJ megajoule 

ML mining lease 

MM million 

mm millimetre 

mmscfd million standard cubic feet per day 

MOA memorandum of agreement 

MOU memorandum of understanding 

MPF status 

major project facilitation status as discussed in Section 6 of 


MTG methanol-to-gasoline 

Mud logs 

geological log of a petroleum well, derived from inspection of 

rock cuttings in drill mud 

Mudstone 

sedimentary rock composed dominantly of mud sized particles 

or grains 

MW and mw megawatt 

Mwe megawatt electric 

MWh megawatt hour 

MWI modified wobbe index 

Natural Gas CH4 being 1 Carbon atom and 4 Hydrogen atoms 

Nm3 normal cubic metres 

Ni nickel 

Non-coking 

describes a coal type which is not suited to coke manufacture, 

but instead may be used for generating heat 

Non-Executive Director a non-executive director of Linc Energy 

NH&MRC the Australian National Health and Medical Research Council 

NNTT the National Native Title Tribunal 

NOx Nitrogen Oxides 

NPAT net profit after tax 

NSPS new source performance standards 

NTA the Native Title Act 1993 (Cth) 

OC open cycle 

OEM original equipment manufacture 

the offer of 88,000,000 shares at an issue price of $0.25 per 

Offer(ed) 

Share to raise $22,000,000 before expenses to the Offer offered 

by this Prospectus 


13 

glossary (cont) 

Offer Period 

Offer Price 

the period between the Opening Date and the Closing Date 

(both inclusive) 

the price at which each Share will be issued under this 

Prospectus which is $0.25 

Official List the official list of ASX 

Official Quotation has the same meaning as quotation in the ASX Listing Rules 

Oil shale 

sedimentary rock containing a variable amount of transformed 

organic matter which on destructive distillation yields shale oil 

OPEC Organisation of Petroleum Exporting Countries 

mode of drilling in which the drill hole is unsealed, and 

Open hole 

lithological information is derived from inspection of drill 

cuttings 

the first date for receipt of completed Application Forms which 

Opening Date is 9.00am EST on 17 March 2006 which date may be amended 

by the company 

Options options issued over shares in the Company 

Ordinary Shares ordinary shares in the capital of Linc Energy 

Overburden non-coal bearing rocks overlying a coal seam 

Pa pascal 

PAH polyaromatic hydrocarbons 

Parting a layer of rock separating two coal seams 

Participating 

an employee of Linc Energy who accepts an offer to participate 

Employee 

in the ESP 

pH 

a measure of the activity of hydrogen ions (H+) in a solution 

and, therefore, its acidity or alkalinity. 

Petrological 

Adj. pertaining to the mineralogical and textural makeup of 

rocks, 

Pentland Interburden 

zone (PI) 

Pentland Lower (PL ) 

Pentland Upper (PU) 

Pentland Interburden zone and relates to Coal Measures as 

being barren zone as described in Section 5 of this Prospectus 

Pentland Lower and relates to Coal Measures coal bearing 

interval containing PL seams PL2, PL4, PL6, PL8 as described 


Pentland Upper and relates to Coal Measures being coal 

bearing interval containing PU seam series PU2, PU4, PU6, 

PU8 as descried in Section 5 of this Prospectus 

PM particulate matter 

Points of Observation 

has the meaning as defined in The Guidelines and as detailed in 

Section 5 this Prospectus 

ppbv parts per billion volume 

ppm parts per million 

ppmv parts per million volume 

ppmw parts per million weight 

ppt parts per trillion 

Pro forma 

the Pro forma Statement of Financial Position as at 31 

December 2005, as set out in Section 4 of this Prospectus 

Project Licence a licence may be granted under the MOU with Linc Energy 

this document or any electronic version of this document 

Prospectus 

downloaded from the Company web site at www.lincenergy. 

com.au 

Prospectus Date 10 March 2006 

Provision General 

Licence 

a licence which may be granted by Ergo Exergy 

Pyroclastic 

the type of volcanic rock or process which involved eruption of 

ash rather than lava 

Qualifying Employee 

means an employee of Linc Energy who is eligible to participate 

in the ESP 

as applied to coal, a measure of maturity or degree of 

Rank 

coalification, the rank of a coal is determinant on many coal 

properties and the suitability for the coal to certain utilisation 

Restricted Securities has the meaning given to that term in the ASX Listing Rules 

RFO ready for operation 

Roof layer of rock immediately above a coal seam 

RS Consult Report 

the Independent Gas To Liquids Consultant Report prepared by 

RS Consult that appears in Section 8 of this Prospectus 

Rules the rules of the ESP 

. 4 


Sandstone 

sedimentary rock composed dominantly of sand sized particles 

or grains 

SAS 

Sasol Advanced Synthol process as described in Section 6 of 


scf standard cubic feet (1 Atm, 60°F) 

SCR selective catalytic reduction 

Secretary the Company secretary of Linc Energy 

Section a section of this Prospectus 

Share Registrar Link Market Services Limited 

Shareholder(s) a person(s) who holds Shares 

Shares 

the fully paid ordinary shares in Linc Energy offered by this 

Prospectus. 

Shedden Uhde Shedden Uhde Australia Pty Ltd 

Shedden Uhde Report 

the Independent Technical Report prepared by Shedden Uhde 

that appears in Section 6 of this Prospectus 

Silicified 

the process involving the entire or partial replacement of a rock 

or fossil by silica, either as quartz, chalcedony or opal 

Siltstone 

the sedimentary rock composed dominantly of silt sized 

particles or grains 

SMDS 

Shell Middle Distillates Synthesis technology as described in 


Solicitors Report 

the legal report prepared by TressCox Lawyers that appears in 


SOx Sulphur oxides 

Specific Energy 

the amount of heat energy generated by the complete 

combustion of coal 

SRU sulphur recovery unit 

SSPD 

sasol slurry phase distillate process as described in Section 6 


Stratigraphy systematic description of a sequence of layered rocks 

Sub-crop position of a rock unit immediately below an unconformity 

Successful Applicant 

an Applicant whose Application has been accepted for such 

value as has been determined by the Company 

Syngas manufactured gas 

Syntroleum Syntroleum International Corporation 

t tonne 

Tenements the Company’s tenements or applications of tenements 

The Guidelines 

the Australian Guidelines for the estimating and reporting of 

inventory coal, coal resources and coal reserves March 2003 

Underground Coal the gasification of coal underground. This process is explained 

Gasification (UCG) in Section 2.5 of this Prospectus 

ug/L Microgram/litre 

UK the United Kingdom 

Unconsolidated sediment which has not been lithified 

UOP universal oil products 

US$ US Dollars 

US(A) the United States of America 

USEPA the United States Environmental Protection Agency 

USSR the former Soviet Union 

Vol% volume percent 

Volatile matter 

those substances in coal other than moisture that are given off 

as gas and vapour during combustion 

Volcanogenic sourced from volcanic rocks or volcanic processes 

WGS water-gas-shift 

chart recording displaying the variation in certain measurable 

properties of the rocks in a drillhole with depth. Examples 

include gamma, which measures the natural radioactivity, 

Wireline logs 

density, which measures the relative density of the rocks by 

the backscatter of sub atomic particles, sonic which measures 

the velocity of sound within the rocks adjacent to the drillhole 

at any given depth point. See also geophysical logs, well logs, 

electric logs 

referring to coal seams, a vertical interval or part of a coal seam 

Working section selected for extraction, having suitable quality to obviate major 

beneficiation

14 WARNINGS: 

This application form is for Shares in Linc 

Energy Ltd under the Prospectus. The Prospectus 

contains information relevant to a decision to 

invest in the Shares and the Prospectus should 

be read in full before an application for Shares is 

made. The Prospectus is available at the website 

www.lincenergy.com.au. Any supplementary or 

replacement documents that Linc Energy Ltd 

issues during the Offer Period (if any) will also 

be available at www.lincenergy.com.au. and will 

be accessible by the same means. The Corporations 

Act 2001 prohibits a person from passing this 

application form to any person unless it is 

attached to the Prospectus and any relevant 

supplementary documents. 

Guide to Completing the 

Application Form 

Shares and Options Applied For 

Enter the number of Shares for which you wish 

to apply in box [A]. The application must be for a 

minimum of 8,000 Shares. Application for greater 

than 8,000 Shares must be in multiples of 1000 

Shares ($250). 

Application Monies 

Enter the total amount payable in box [B]. To 

calculate the amount, multiply the number of 

Shares applied for by $0.25 cents per Share. 

how to complete the application form 

Registration Name(s) 

Enter the full name(s) you wish to appear on the 

statement of Shareholding in box [C]. This must be 

either your own name or the name of a Company. 

Up to 3 joint applicants may register. Ensure you 

put full names - not initials, no abbreviations, 

with trusts, funds or estates, sign the name of the 

trustee or executor, with partnerships or clubs use 

a partner’s name or officer’s name, not the name 

of the partnership or club. Applications using 

the wrong form of name may be rejected. CHESS 

participants should complete their name and 

address in the same format presently registered 

in the CHESS system. 

TFN/ABN TYPE 

Please note the appropriate box at [D]. 

Postal Address 

Enter your postal address for all correspondence 

in box [E]. All communications to you from the 

registry will be mailed to the person(s) and address 

as shown. For joint applicants, only one address 

can be entered. 

CHESS HIN (if applicable) 

Enter your Holder Identification Number (HIN) 

(if applicable) in box [F]. Linc Energy Ltd will 

apply to the ASX to participate in CHESS, operated 

by ASX Settlement and Transfer Corporation Pty 

Ltd, a wholly owned subsidiary of the Australian 

Stock Exchange Limited. In CHESS, Linc Energy 

Ltd will operate an electronic sub-register of 

CHESS security holdings and an electronic issuer 

sponsored sub register of shareholdings. Together, 

the two sub registers will make up the Company’s 

principal register of Shares. Linc Energy Ltd will 

not be issuing certificates to applicants in respect 

of Shares allotted. 

Telephone Number 

Enter your telephone number in box [G]. 

This is not required but will assist us if there 

are any problems with your application. 

Payment Details 

Make your cheque payable to 

“Linc Energy Ltd - Share Issue Account” 

in Australian currency, marked “Not Negotiable”. 

Your cheque must be drawn on an Australian 

financial institution. 

Complete the Payment Section and cheque 

details in the boxes provided. 

Sufficient cleared funds should be held in your 

account as cheques returned unpaid will not be 

re-presented and may result in your application 

being rejected. 

Pin (do not staple) your cheque(s) to the 

application form. 

Lodgement of Applications 

Completed paper application forms, including 

application forms obtained from the Linc website 

via www.lincenergy.com.au and accompanying 

cheques must be mailed or delivered to: 

Linc Energy 

C/o Linc Market Services Limited 

Locked Bag A 4 


Cheques should be crossed “not negotiable’’ 

and made payable to “Linc Energy Ltd – Share 

Issue Account’’. 

Application forms and accompanying cheques 

will not be accepted at the registered office of 


If you are a CHESS participant (or are sponsored 

by a CHESS participant) and you wish to hold 

Shares allotted to you under the Prospectus in 

uncertificated form on the CHESS sub register, 

enter your CHESS HIN. Otherwise, leave the section 

blank and on allotment you will be sponsored by 

Linc Energy Ltd and a Security Holder Reference 

Number (SRN) will be allocated to you. 

Important Note 

Please ensure you have received the entire 

Prospectus. If in doubt, enquiries may be 

directed as follows: 

Mr David Smith 

BBY Limited 

Level 17, Met Centre 

60 Margaret Street 


Phone 02 9226 0112 

Fax 02 9226 0108 

E-mail des@bby.com.au 


PUBLIC Offer APPLICATION FORM 

Pin cheques here. Do not staple Broker Code Broker Stamp 

A 

C 

D 

E 

F 

G 

H 

LINC ENERGY LIMITED ABN 60 076 157 045 

Shares applied for Price per Share Application Monies 

(minimum 8,000 Shares, thereafter in multiples of 1,000 Shares) 

at A$0.25 A$ 

Please complete your details below (refer overleaf for correct forms of registrable names) 

Single Applicant / Joint Applicant #1 

Surname / Company name 

Title First Name Middle Name 

Joint Applicant #2 Surname 

Date of Birth (dd/mm/yy) 

Title First Name Middle Name 

Designated account e.g. (or Joint Applicant #3) 

Adviser Code 

Date of Birth (dd/mm/yy) 

TFN/ABN type - if NOT an individual, please mark the appropriate box. Company Partnership Trust Super Fund 

Please complete address details 

PO Box / RMB / Locked Bag / Care of (c/-) / Property name / Building name (if applicable) 

Unit Number/Level Street Number Street Name 

Suburb/City or Town State Postcode 

Email address (only for purpose of electronic communication of shareholder information ) 

CHESS HIN (If you want to add this holding to a specific CHESS Holder, write the number here) 

X 

Please note that if you supply a CHESS HIN but the name and address details on your Application Form do not correspond exactly with the registration details held at CHESS, your 

Application will be deemed to be made without CHESS HIN and any Shares issued with the Offer will be held on the issuer sponsored sub-register. 

Telephone Number where you can be Contacted during Business Hours Contact Name (PRINT) 

This Application Form is for Shares in Linc Energy Ltd under the Public Offer on the terms set out in the Prospectus dated 

10 March 2006. You may apply for a minimum of 8,000 Shares and multiples of 1,000 Shares thereafter. This Application 

Form and your cheque or bank draft must be received by 5:00 pm (Sydney Time) on 27 April 2006. 

If you are in doubt as to how to deal with this Application Form, please contact your accountant, lawyer, 

stockbroker or other professional adviser. The Prospectus contains information relevant to a decision to 

invest in Shares and you should read the entire Prospectus carefully before applying for Shares. 

Cheque or money orders should be made payable to “Linc Energy Ltd – Share Issue Account” in Australian currency and crossed “Not Negotiable” 

Cheque or Bank Draft Number BSB Account Number 

– 

LODGEMENT INSTRUCTIONS 

You must return you Application so it is received before 5:00 pm (Sydney Time) on 27 April 2006 to: Link Market Services Limited, Locked Bag A14, Sydney South, NSW, 1235 

If you receive a firm allocation of Share and Options from you Broker this form must be lodged to that Participating Broker in accordance with their instructions. 

B 

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