Carbon Energy (ASX: CNX) has started works on its first commercial underground coal gasification project in Inner Mongolia, China, that could generate up to $8.25 million in revenues by mid-2014.
The company and Chinese Top 500 enterprise Zhengzhou Coal Industry Group have agreed on the scope of works comprising a total of eight engineering packages, for the design and commissioning of the first UCG panel.
It expects to earn $5.25 million from the engineering works to be performed to design and commission the first UCG panel along with a Technology Fee milestone payment of $3 million on successful commissioning.
Commissioning of the first panel is estimated to occur by mid-2014.
Further Engineering Services Fees and $7 million in Technology Fees are payable during and on achievement of certain milestones over subsequent phases in implementing the commercial scale project and subject to the successful commissioning of the panel.
Carbon is the exclusive UCG technology provider for Zhengzhou.
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