Australia-listed Armour Energy has signed a gas supply agreement covering its exploration permits in north-west Queensland.
The company entered into a non-binding memorandum of understanding with MMG Century to supply gas to MMG’s Queensland mine operations.
MMG’s Lawn Hill mine site is located on Armour’s 100% owned ATP1107, which is pending approval and transfer from the Queensland government.
Initially the companies will work together on project feasibility and economics of gas supply to keep up with a potential expansion of existing site power generation capacity, or the development of new power generation facilities on the Century mine lease or the Greenfield sites on the permit.
The study will look at potential gas supply volumes of up to nine petajoules per annum plus more for potential third party requirements.
If Armour farms out its interest in the tenement to a third party, gas supply to MMG would relate to Armour’s equity gas only.
Armour chief executive Robbert de Weijer said this deal underscored the potential for future operations in the region.
“This MOU is an important first step towards early monetisation and proof of concept for Armour’s potentially enourmous shale gas resources in the region,” he said.