Tlou Energy Limited (AIM:TLOU, ASX:TOU, BSE:TLOU) has signed Heads of Agreement (HOA) with Aussie group Synergen Met for a hydrogen conversion plant at Lesedi in Botswana.
Synergen Met has developed a process to convert methane into solid carbon and hydrogen, with a prototype already running that has produced hydrogen and sodium cyanide.
Design work is underway to modify this process to produce hydrogen and solid carbon using Tlou-owned Lesedi’s gas flows.
Tlou said the agreement offers a way to utilise Lesedi’s existing gas flow which is currently being flared while diversifying its products and customer base and offering a huge expansion potential beyond a successful prototype.
Synergen Met intends to list later this year and as part of the HOA Tlou will invest in that IPO.
Under the HOA third party costs to build the prototype will also be shared on a 50:50 basis with in-house costs covered by each party.
Tlou will supply the input gas and electricity at no cost to Synergen Met for the prototype.
Tony Gilby, Tlou's managing director, said "The HOA with Synergen Met is a truly exciting development for both companies.
“It potentially creates another major market for our gas that will complement, and be in addition to, the Lesedi gas to power project.
“While the gas to power project is steadily progressing, the hydrogen-carbon prototype can be done using Tlou's gas flow from Lesedi 4P and existing approvals for gas and solar.”