ECSI (ASX: ECS) is working towards finalising the acquisition of an option to acquire seven coal permits in Hungary with capital raisings totalling $150,000 by way of a share placement and convertible note issue.
Importantly, the money raised will place ECSI in strong financial position to be able to fund the transaction costs associated with the proposed acquisitions announced in late January, and to provide working capital.
The company will place 20 million shares at A$0.005 each to a sophisticated investor to raise $100,000.
ECSI has also issued a convertible note to Song Je Yeng for $50,000, convertible into 10 million shares. The term for the convertible note is six months, with an interest rate of 8% per annum.
Under the acquisition, ECSI secured an option agreement to acquire all of the issued shares in Synclean Resources, a wholly owned subsidiary of Synclean Energy, which owns permits covering around 738 square kilometres prospective for underground coal gasification (UCG)-suitable coal seams in two different regions of Hungary.
The Hungarian Permits are located in areas of relatively good infrastructure with access to both road and rail in an area with a rich history of mining.
The permits are also located close to potential markets and well situated to take advantage of the regional pipeline network and power stations.
If ECSI chooses to exercise the option to acquire the permits, the company will have exclusive rights to explore and investigate coal seams suitable below 300 metres for UCG use.
The Vesprem permits – comprising Bakony-North I, Bakony-North II, Gerecse and Berhida – are known to contain resources of high grade brown coal well suited for use as part of a potential UCG operation.
The permits contain between two and four coal seams at a depth of below 300 metres. The average thickness of the seams is 2 metres, with a maximum thickness of 4 metres developed in some areas of the permit.
The Mecsek Mountains permits are comprised of three separate permits – Volgyseg-Hegyhet, Komlodeep and Hosszuheteny West.
Historical data indicates that the permits contain up to 60 separate coal seams. The coal seams attain a maximum thickness of 30 metres, although the mean seam thickness in the permit area is around 1 metre.
The coal seams in the Mecsek area are deeper than on the Vesprem Bakony permit area with depths in excess of 450 metres, 550 metres and 800 metres for Hosszuheteny, Hegyhat, and Komlo-deep respectively.
The greater depth of the seams makes the coal ideal for UCG purposes as it can exploit coal seams that are uneconomic for conventional mining.
Importantly, ECSI has access to existing data on the coal seams from more than 11,000 exploration wells drilled, which the company will use to fast track the initial site selection process.