LNC 0.00% 99.5¢ linc energy ltd

a brief summary from a layman

  1. 5,049 Posts.
    for those that may read the linc thread there is a lot of reference material pasted referring to coal to liquids.

    the coal to liquid reference is typically regarding above ground coal to liquids. this involves digging up the coal and transporting it to a gas to liquids (GTL) plant.

    there is nothing unique about this process and sasol (south africa) have been using coal and transforming it into liquid for 30+ years. other countries have adopted the process and china's first gtl plant will open this year.

    linc is involved in coal to liquids but there is a unique difference. linc are combining a process called underground coal gasification (ucg). rather than dig the coal up and transport it to a gtl plant, they are bringing the gtl plant to the coal. the coal isn't dug up and it isn't transported.

    ucg isn't a unique process in itself because the russians have used ucg to generate electricity for decades.

    what is unique is linc have combined both processes (ucg/gtl) to produce liquids. the demonstartion plant in chinchilla, qld, will be commissioned on the 28th. this is the first of its type in the world and make no mistake, the world will be watching.

    so what are linc's targets?

    firstly, to prove the process. "production testing" gets underway on the 28th with first liquid expected in 4-6 weeks.

    secondly, linc will build a 20,000 barrel per day gtl facility with possibly a power station up to 200mw which will be used to power the gtl plant and add revenue via selling electricity into the grid. managemet have declared that they are open to building a larger plant with higher production than 20,000bpd.

    linc curently have a jorc coal resource of 400 million tonnes at chinchilla. management anticipate the resource will grow to 1 billion tonnes but who cares, we will all be long dead before they get thru the first 400 millon tonnes.

    it takes 1 tonne of coal to produce 1.5 barrels of liquids. so linc have a resource able to produce 600 million barrels. the price per barrel is anticpated to be a premium to the spot price of a barrel of oil.

    opex costs are $25 per barrel. 1 barrel contains 160 litres which gives an opex cost per litre of 15c......yes it will cost linc 15c to produce 1 litre of liquid......caltex's margin is 1.5c per litre so that should give you some idea of the significant margin that linc will be exposed to relative to the caltex's of the world because linc arent buying a barrels of oil and incurring further expenses to refine it.

    linc are currently valued at 50c per barrel which provides significant upside IF potential becomes reality.

    www.lincenergy.com.au

    cheers







 
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