Shares in Leigh Creek Energy Ltd (ASX: LCK) were flying high this morning after the company broke its 3-day trading halt with major news of its energy project.
After touching a high of 30 cents in opening trade, the Leigh Creek Energy share price has retreated to 28 cents at the time of writing, up 3.7%.
Let's take a closer look at the energy company's news.
Leigh Creek Energy Project
Leigh Creek announced it has signed a binding heads of agreement (HoA) for a urea manufacturing facility with South Korean engineering and construction company DL E&C.
Under the agreement, DL E&C will become the engineering, procurement, construction, and commissioning (EPCC) contractor at the Leigh Creek Energy Project, a large-scale power plant and construct urea plant in South Australia.
As EPCC contractor, DL E&C will begin work on the project's feasibility and front end engineering and design (FEED) stages. The contractor will finance the project with Leigh Creek Energy's assistance, building it for a to-be-decided turn-key price.
The project is located in the disused Leigh Creek Coalfield. It will produce syngas from the resource that is no longer economic to mine using an in-situ gasification process. Leigh Creek Energy will use the syngas to produce urea fertiliser with hydrogen optionality.
According to the company, the Leigh Creek Energy project will be the only fully integrated urea production facility in Australia. It said the project would create thousands of jobs during construction, commissioning and operation.
Commentary from management
Leigh Creek Energy managing director Phil Staveley commented on the news, saying:
This HoA is a major milestone for [Leigh Creek Energy] as we are partnering with a leading global organisation with huge experience.
We have chosen DL E&C from a pool of contenders as we are confident that they can deliver a first class urea production facility which will employ the latest innovative technology and that they will be a reliable partner.
Leigh Creek Energy share price snapshot
Leigh Creek Energy's trading halt was watched closely by ASX investors waiting to hear the company's announcement.
With today's gains included, the Leigh Creek Energy share price is up 61.7% year to date. It's also up 205% over the last 12 months.
The energy company has a market capitalisation of around $179 million, with approximately 675 million shares outstanding.
