Melbourne-based Pinnacle VRB is set to start a coal gasification project in Australia with its acquisition of Cougar Energy.
The company plans to use Cougar’s underground coal gasification process to produce gas from four coal deposits in south-east Queensland that it had bought from Metallica Minerals on 18 May.
Pinnacle said that Cougar’s process allows coal to be processed below ground, allowing economic use of coal reserves that would otherwise be uncompetitive with minimal ground disturbance.
The company will buy all shares in Cougar through an issue of 145 million of its own shares and 72.5 million A$0.03 options with an exercise price of A$0.03 (US$0.022) each that expire in three years.
Pinnacle will also buy 50% of the Cougar UK, which has an agreement to use Cougar’s process in India, Pakistan, the UK and Europe, for A$250,000.
It will conduct a placement of 40 million shares and 100 million options to raise A$1 million. Each share will be priced at A$0.0225 each while each option has an exercise price of A$0.05 and expires on 31 December 2008.