Elixir Charts Mongolia Exit

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Elixir Charts Mongolia Exit

Elixir Energy Ltd. said it has signed agreements for a Mongolian partnership with Gobi Terra (UK) Ltd. that provide for the Australian company’s eventual exit from the Central Asian nation. The companies agreed to form two incorporated joint ventures (JVs), one to hold Elixir’s coal bed methane (CBM) business in Mongolia and the other to […]

Elixir Energy Ltd. said it has signed agreements for a Mongolian partnership with Gobi Terra (UK) Ltd. that provide for the Australian company’s eventual exit from the Central Asian nation.

The companies agreed to form two incorporated joint ventures (JVs), one to hold Elixir’s coal bed methane (CBM) business in Mongolia and the other to hold its renewable energy assets in the country, according to a regulatory disclosure by Adelaide-based Elixir.

Gobi Terra, which Elixir described as a private United Kingdom company “controlled by Mongolian business interests”, will have a 51 percent stake each in the JVs.

In the CBM JV, Gobi Terra “will fully carry Elixir through all costs to a final investment decision (FID) on a gas development”, stated the filing on the Australian Securities Exchange. The farm-out agreement consists mainly of the Nomgon CBM production sharing contract and related facilities.

“The Farmout Agreement also contains conditional put and call options that can be exercised upon FID being reached, providing for Elixir to exit at a price of US$0.30/GJ of 2P [proven and probable] booked reserves, capped at US$30 million”, Elixir added.

In the renewables JV, which will contain Elixir’s Solar Ilch pre-development solar farm and wind and solar monitoring equipment, Gobi Terra will also own 51 percent “and fully carry Elixir through all costs to any final investment decisions on the proposed solar/wind farm developments”, Elixir said.

The companies agreed that Elixir would receive $2 million plus $20,000 per megawatt (MW) of installed capacity at a maximum of 50 MW. “A 50 MW solar farm would therefore entail a total payment of $US3 million to Elixir”, the filing said.

They also agreed to payments of $1 million plus $10,000 per MW of installed capacity at a maximum of 200 MW. “A 200 MW wind farm would therefore entail a total payment of US$3 million to Elixir”, Elixir said.

The satisfaction of these conditions will allow Elixir to fully hand over the renewable assets to Gobi Terra.

Elixir said the divestments would allow it to focus on an Australian natural gas development project that is in the drilling phase.

“This farmout deal facilitates the ever greater focus of Elixir upon its Grandis project in Queensland, as the farminee party will cover all costs for the Company’s Mongolian businesses up to FID”, said Elixir managing director Neil Young.

“The deal also provides a pathway to potentially exit in due course on pre-agreed terms which are highly valuable to Elixir, with, possibly, payments totaling A$56 million (at current exchange rates)”.

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