(EnergyAsia, March 9 2012, Friday) — Australia’s Altona Energy said it has completed the acquisition of a 95% interest in two advanced coal exploration licences in China’s Xinjiang Uygur Autonomous Region.

The AIM, England-listed energy company said it has agreed to pay a total of £13 million in tranches conditional on the achievement of development and performance milestones. Earlier, the company said it had raised an additional £1 million for working capital by selling shares to institutional investors through a conditional placing. (US$1=£0.63).

“The exploration assets are advanced and are expected to be readily converted into mining licences,” it said.

According to Chinese standards, the licences are thought to hold 1.17 billion tonnes in areas well connected to good road infrastructure linked to growing local and regional markets. A large portion of the mostly medium to high energy thermal coal reserves is accessible by conventional truck-and-shovel open cut mining methods.

The seller was identified as Cheung Wing Kwong, who controls the licences through Cheerful Jade Investment Holding Limited, a company incorporated in the British Virgin Islands.

Christopher Lambert, Altona’s chairman, said:

“These are advanced exploration assets that are expected to have a clear path through the mining licence application process and into production. This is a transformational move for the company, providing the potential to move into production in the near term on a sustainable basis, and generate strong cash flows underpinning Altona’s future, as it actively continues the progression of the bankable feasibility studies on its flagship Arckaringa Project in joint venture with CNOOC-NEI.”

He revealed that Altona’s managing director, Chris Schrape, led the due diligence team alongside Altona Beijing office.

Xinjiang in western China is becomingly an increasingly important coal mining centre. According to the country’s highest economic policy and planning agency, the National Reform and Development Commission (NRDC), Xinjiang contains 2.19 trillion tonnes of coal reserves or 40% of the nation’s.

Historically, production has been small, but recent NRDC statistics indicate that, as a result of new mine developments over the past decade, coal output rose to around 100 million tonnes last year.

With continuing development of transport and industry infrastructure in western China, analysts expect output from existing and new mining operations in Xinjiang to grow in coming years.

Altona listed on the AIM London Stock Exchange in March 2005. Through its wholly owned subsidiary, Arckaringa Energy Pty Ltd, Altona holds a 49% interest in three exploration licences covering 2,500 sq km in the northern portion of the Permian Arckaringa Basin in South Australia including the Westfield (EL4511), Wintinna (EL4512) and Murloocoppie (EL4513) coal deposits.

The deposits lie close to the Adelaide-to-Darwin railroad and the Stuart Highway.

The company’s chief aim is to commercialise the Arckaringa coal-to-liquids and power project. Altona has forged a joint venture with CNOOC New Energy Investment Co Ltd, a subsidiary of the China National Offshore Oil Corporation (CNOOC), to complete a bankable feasibility study and expedite the project’s development.