Reabold Resources PLC (AIM:RBD) told investors it has entered into a non-binding heads of agreement with commodity trading firm Gunvor International, for the liquefied natural gas to be produced from the Colle Santo gas field in Italy.
It envisages that Gunvor will buy around 44,000 tonnes of LNG annually from Reabold's partner, LNEnergy Limited, over a minimum period of five years.
The transaction, if sealed, is expected to include a prepayment component which would provide cash to help fund the project. It is anticipated that the presale volume would equate to some 66,000 tonnes, representing around 30% of the total sales agreement.
"We are delighted with this progress towards an extremely significant milestone for our LNG project at Colle Santo in Italy,” Reabold co-chief executive Stephen Williams said in a statement.
“The agreement envisages a counterparty of the highest quality potentially providing both offtake and a prepay, which is extremely valuable for the project in these times of capital scarcity in the industry.”
Williams added: “In keeping with Reabold's broader strategy, Colle Santo has the potential to provide significant, reliable and low carbon energy into the Italian market, improving European energy security whilst contributing to an efficient energy transition."
The AIM-quoted company noted that negotiations for a fully-termed LNG sale and purchase agreement are expected to continue over the next six months, with LNEnergy holding exclusive negotiation rights with Gunvor during this period.
Reabold holds a 26.1% interest in LNEnergy, which in turn owns 90% of Colle Santo.