Queensland Pacific Metals (QPM) has announced that its subsidiary, QPME, has signed a Memorandum of Understanding (MOU) with Fitzroy Coal Management Pty Ltd to accelerate gas drainage at the Carborough Downs Mine.
QPM said existing co-development agreements (CDA) control gas output from the Moranbah Project term, which overlaps with the Carborough Downs Mine mining leases. QPME and Fitzroy acknowledge that the CDA is insufficient for certain of the business efforts that the parties wish to pursue.
QPME and Fitzroy have signed a non-binding MOU to draft a supplemental agreement regulating a combined waste gas drainage and collecting system for the Domain 3 project. QPME will control full rights to this gas, which it will sell to clients (including the TECH Project) or transfer to Townsville Power Station for electricity generation.
Carborough Downs Mine is an underground mine with mining licences inside Moranbah Project’s PL 223.
Fitzroy intends to mine Carborough Downs’ Domain 3 area. Fitzroy must first extensively drain the gas in the coal seam to fulfil safety and environmental criteria before mining the Domain 3 area. According to QPM, this gas is often flared, resulting in Scope 1 carbon emissions that the mine operator must report.
Fitzroy has created a four-year SIS well drilling program. The program is expected to recover roughly 6.9 PJ of gas over a seven-year period in the base case, with an upside scenario recovery of 8.9 PJ.
QPME will provide gas to consumers and the Townsville Power Station using the existing Moranbah Project collection and processing infrastructure.
The parties agree in the Supplementary Agreement that the costs of the SIS well program would be split evenly. QPME and Fitzroy intend to begin the drilling program as soon as feasible to optimise waste gas drainage and collection before mining and will work towards completing the Supplementary Agreement immediately after QPME completes the financial close on the Moranbah Project acquisition.
The overall cost of the SIS wells is projected to be around $35 million. Additional gas collection infrastructure to connect Domain 3 gas to the existing Moranbah Project infrastructure is expected to cost $1.5 million.
QPM added that the MOU with Fitzroy exemplifies QPME’s policy of collaborating with area coal mines to drain and collect waste gas to offer cost-effective output at the Moranbah Project. Early gas drainage is critical for optimising gas collection, reducing carbon emissions, and enhancing safety.
