Synthesis Energy Systems Inc and Midas Resources AG announced the formation of SES Resource Solutions Ltd, 50:50 joint venture between SES and Midas.
SRS has been created to provide an expanded business development platform to increase and accelerate the value created for SES from its U-GAS technology. Key objectives of the joint venture are to identify and procure low cost, low rank coal resources for which SES' technology and the joint venture's know-how represents the best route to commercialization;
1. To provide investment opportunities in both gasification facilities and coal resources
2. To facilitate the establishment of gasification projects globally based on SES' technology.
In pursuing these objectives, the joint venture will seek to minimize the requirement for joint venture shareholder capital and maximize the use of third party financing.
Terms of the joint venture agreement include:
1. SRS will have the exclusive right to promote SES' gasification technology for the purpose of securing low-cost coal resources in projects worldwide that have been approved by SES,
2. Midas will provide expertise to originate and execute the above projects,
3. SES will provide SRS with technology licenses and engineering development support for use in developing the joint integrated coal resource projects,
4. SES and Midas will equally contribute to the formation and operation of SRS with SES budgeting USD 2.0 MM and Midas contributing the equivalent amount in services over a two year period after which SRS should be self-funding, and
5. SRS will be governed by a four person board of directors, two of which will be appointed by SES and two of which will be appointed by Midas.
SES and Midas intend to establish separate entities for specific projects to attract external funding for these entities and will derive revenue from licensing fees, service fees, equity participation and royalties.
Mr Robert Rigdon President and CEO of SES said "In addition to our existing business development activities, we believe our participation in this joint venture offers a unique, highly competitive, and cost-effective means to drive value creation for our partners and our shareholders through the acquisition of ownership interests in coal resources. This would be realized through secure long term low cost coal for projects or via eventual sale of these positions and/or would provide revenues once these resources are in production. Together, we expect to accelerate the commercialization of our U-GAS® technology and create long-term value by combining this technology and our engineering services with Midas' expertise in originating, developing and financing natural resource projects worldwide."
Mr Mike Oppenheimer a founding principal of Midas and Chairman of SRS said, "Low rank coal resources are abundant in most areas of the world but remain largely untapped due to the significant technical challenges and costs associated with converting them into affordable clean energy products. We will leverage the advanced SES U-GAS® technology and capabilities along with our global natural resource business development experience and relationships to create investment opportunities for third parties which focus on the development of projects to create high value, clean-energy products from these resources."
