Third GSA in a month: Senex Energy (ASX:SXY) to supply gas to 29Metals

Highlights

  • Senex Energy is set to supply 2.5 PJ of natural gas to resources company 29Metals.
  • The natural gas supply will be used to generate power to run 29Metals’ Capricorn Copper Mine.
  • Senex is experiencing huge demand for natural gas supply from the domestic market.

Australian natural gas producer Senex Energy Limited (ASX:SXY) and Australian resources company 29Metals Limited (ASX:29M) have signed a gas sales agreement (GSA). Over three years, Senex will supply around 2.5 PJ of natural gas to support the mining operations at 29M’s Capricorn Copper mine.

This is Senex’s second GSA in the North West Minerals Province. The company recently secured a GSA to supply gas to New Century Resources, a zinc concentrate producer.

Also, early in September, Senex Energy scored a deal from Australian packaging and paper manufacturer Opal for the supply of up to 12 PJ of natural gas.

Related read: Senex (ASX:SXY) & New Century Resources (ASX:NCZ) agree new gas sales agreement

Terms of the agreement

Under the gas sales agreement, Senex will supply natural gas to the Diamantina Power Station, located in Mount Isa in Queensland. The power station is owned and operated by APA Group.

The natural gas will be utilised to generate power to run the mining and processing operations at the Capricorn Mine, which is nearly 120km north of Mount Isa.

Senex Energy, SXY, 29 Metals, 29M, gas deal, copper project

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Under the three-year deal, natural gas supply will commence from 1 January 2022 at a fixed price, based on the current market levels. The sales agreement could be extended for a further two years, if required, increasing the gas supply volume to nearly 4 PJ.

Related read: Which are the Top 10 LNG Stocks on ASX?

Ian Davies, Managing Director and CEO of Senex, welcomed the deal, highlighting that Senex is proud to supply natural gas to a strong regional customer.

The Capricorn Copper mine is a critical project in the Queensland Government’s Strategic Blueprint for the North West Minerals Province”, said Davies.  

Also read: Vita (ASX:VTG) strikes a share sale deal with Telstra (ASX:TLS)

Copper has a very critical and large role to play in the production and operation of next-generation clean technologies in the electric vehicle, solar and wind power sectors.

“Senex looks forward to building another strong, long-term and mutually beneficial relationship that supports jobs, the economy and helps meet Australia’s energy demand as it transitions to a lower carbon future”, Davies added.

Bottom Line

Senex is a rapidly growing and low-carbon natural gas producer in Australia. The Company remains committed to aiding Australia’s energy needs as the country transitions to a lower carbon future.

With a robust demand from the domestic market, Senex has inked agreements for the supply of around 80 PJ of natural gas to customers, including Adbri, CSR Building Products, Opal, CleanCo Queensland, Orora and Visy Glass.

Related read: Brent crude hits 2-month high level on supply concerns

Stock Information

SXY opened flat today. At the time of writing this report, the stock was trading at AU$3.53 with a market capitalisation of AU$652.09 million, as of 24 September 2021.

Shares of 29M were trading at AU$2.47 midday 24 September 2021 with a market cap of AU$1.19 billion.

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