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Leigh Creek Energy Limited (ASX: LCK), headquartered in Adelaide, is an emerging energy company with a primary focus on developing its Leigh Creek Energy project located to the north of Adelaide, South Australia. It explores for coal and synthesis gas including methane, hydrogen, and carbon monoxide.
On March 27th, 2019, the company informed the market that it has received a PRMS certification of 1,153 PJ 2P at the Leigh Creek Energy Project (LCEP) from the US-based MHA Petroleum Consultants. This follows the companyâs earlier announcement that the discussions were underway with PRMS consultant concerning the upgrade of a portion of its 2,964 2C Resource to 2P and 3P Reserve status.
The 2P certification follows the production at the pre-commercial demonstration plant (PCD) at the LCEP which included all industrial gases with targeted commercial flow rates from a single gasifier. It further affirms the economic value of the project, which is now one of largest undeveloped and uncontracted gas reserves in Eastern Australia.
The development marks a key milestone for the company that can now proceed to negotiations with the potential joint-venture partners concerning the investment structures and financing solutions for a full-scale commercial facility. When in full production, LCEP will generate stellar economic opportunities for the company and its stakeholders.
Going forward, Leigh Creek Energy has a couple of commercialization paths when LCEP gets entirely operationalized. These include the sale of synthetic natural gas into the Australian East Coast market or utilizing the gas to manufacture ammonia-based fertilizer products, both of which have highly positive economic returns. While the company can enter both the markets, it is planning to progress on a dual path, that is a combination of the two options.
Earlier in March 2019, the company informed the market that it had closed the oversubscribed pro-rata 1-for-15 non-renounceable rights issue on February 28th, 2019 at 5.00 pm, which commenced in January 2019 and received strong support from shareholders and investors. Around 15,535,591 entitlement shares were issued to the shareholders on March 7th, 2019 and 16,610,133 additional shortfall shares were issued on March 19th, 2019. The offer raised around AUD 3.86 million of funds that will be utilized primarily as the working capital.
For the half-year ended December 31st, 2018, the company recorded a total loss from continuing operations at ~ $ 4.36 million, up on $ 2.82 million in the prior corresponding period (PCP) ended December 31st, 2017. The net assets were valued at approximately $ 26.34 million including net cash and cash equivalents of $ 4.26 million at the end of the period. The operating activities resulted in net cash inflows of $ 6.29 million primarily due to substantial R&D rebates received (~ $ 9.01 million). This was further boosted by cash inflows of $ 3.77 million from financing activities. On the contrary, the investing activities amounted to net cash outflows of $ 15.12 million.
The LCK stock price soared by 30.16% to AUD 0.410 with the end of the trading session on March 27th, 2019 Today, the stock is trading 12.2% down at AUD 0.360 (as at 1:00 PM AEST, March 28th, 2019). LCK has also generated a positive and high YTD return of 241.67 so far.
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