L&M Energy Applies for Gasification Permit

L&M Energy Applies for Underground Coal Gasification (UCG) Prospecting Permit 52711

As part of its long term strategy to secure substantial energy resources in New Zealand L&M Energy Limited (ASX/NZX: LME) is pleased to advise that it has lodged an application for a Prospecting Permit over a 2112 sq km area containing in excess of 2 billion tonnes of Waikato coal measures (see map). The application area is located north and south of the Huntly coal mines, which produce coal for supply to power generation and New Zealand Steel.

In the region, coal quality data and coal thickness of up to 15 meters has been well documented by mining and exploration, with more than 250 holes having been drilled in various programmes, including a total of eight coal seam gas wells drilled in the area over the last few years by LME. Coal rank varies from sub-bituminous A to C.

The Waikato region is judged to be the most prospective in New Zealand for UCG technology because of large resource of available coal and the gas pipeline systems passing through the permit area to supply the large Auckland market.

New Zealand is experiencing declining gas production from existing fields with inadequate supplies to feed existing fertilizer and methanol plants. Forward local gas prices are currently about NZ$8 per GJ delivered to the pipeline and future upward price pressure is expected to continue.

With the Government’s recent reduction in corporate income tax to 28% from 1 October 2010, coupled with what considered one of the world’s most attractive fiscal regimes for explorers, New Zealand has experienced a surge in resource exploration activity and has become a focus for large international explorers, evidenced by the entry of exploration giants such as Anadarko only last month and Petrobras, as announced by the Minister of Energy last night.

ENDS

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