Ignite Energy Resources

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Ignite Energy Resources (IER) is a small unlisted Melbourne-based company which aims to commercialise the conversion of brown coal to oil products. The company currently has no commercially operational plants. IER currently operates – through a wholly-owned subsidiary, Licella - a small scale brown coal test plant at Somersby in New South Wales.

Despite significant financial uncertainty about the company, in mid-May 2014 the Victorian and Commonwealth government's allocated $20 million to IER from the Advanced Lignite Demonstration Program for the construction of an "$84.3 million pre-commercial plant producing upgraded coal products for local or export markets and synthetic oil."

IER's technology

At the heart of the company's plans is a proprietary technology patent on a "catalytic hydrothermal reactor (Cat-HTR) – to upgrade the energy density of lignite to synthetic crude oil and produce an upgraded coal with similar characteristics to PCI type coal." Pulverised Coal Injection coal is a lower quality metallurgical coal.

The company claims that its "Super Critical Water (SCW) reactor technology" can convert plant matter and "and ancient Biomass (coal) into highly valuable oil and coal products." On its website it states that it aims to "build commercial scale SCW reactors throughout the world." These "reactors", it states, "cost effectively converting low valued feedstocks into high valued products could create substantial margins."

On its website IER states that it aims to develop the gas resources within a 3,700 square kilometres exploration licence, EL4416 in the Latrobe Valley in Victoria. The company states that it aims to use a proprietary technology to upgrade the lignite resource within the exploration licence for sale as PCI coal or synthetic crude oil.

Company structure and subsidiaries

Documents lodged with the Australian Securities and Investment Commission state that just over 208 million shares have been issued. The company’s ASIC document indicates that $196.6 million has been paid for the shares.

The company has three main subsidiaries:

• Ignite Resources, which has exploration rights to the mineral resources with the coal and gas exploration licence EL4416;

• Gippsland Gas, which is seeking to develop the gas resources within EL 4416 with joint venture partner, ExxonMobil; and

• Licella, which currently operates a 20,000 tonne test plant, the Ignite Energy 'CAT-HTR' Demonstration Plant in Somersby in New South Wales. The plant may be moved to be co-located with EnergyAustralia's Yallourn Power Station. IER states that the plant uses a "modified Cat-HTR process" in the plant. In its annual report the company lists its investment in the company as $40 million.

The company's annual report also lists other subsidiaries as comprising:

• Ignite Energy Resources Engineering Pty Limited Australia, a wholly owned subsidiary which the annual report lists as being a a $65 million investment;
• Licella Fibre Fuels Pty Ltd Australia, a 87.5% owned subsidiary with a $120,000 investment;
• Gippsland Gas Pty Ltd Australia, a wholly owned subsidiary with a $500,000 investment;
• Gelliondale Resources Pty Ltd, , a wholly owned subsidiary;
• Gormandale Resources Pty Ltd, a wholly owned subsidiary;
• Stradbroke Resources Pty Ltd, a wholly owned subsidiary; and
• Entrance Energy Inc.(formerly Gastar Inc.) U.S.A., a wholly owned subsidiary with a $40,000 investment.

Advanced Lignite Demonstration Program

In August 2013 The Age revealed that Ignite Energy Resources was one of three companies which were leading contenders for funding under the $90 million federal and Victorian government Advanced Lignite Demonstration Program. The Age reported that Ignite Energy Resources chief executive Len Humphreys refused to comment on whether the company had submitted an application for funding. The other two contenders at the time were Coal Energy Australia and Shanghai Electric Australia Power & Energy Development.

In mid-May 2014 the Federal Minister for Industry Ian Macfarlane, Deputy Premier Peter Ryan and Victorian Minister for Energy and Resources Russell Northe announced that Ignite Energy Resources had been granted "$20 million for the development of an $84.3 million pre-commercial plant producing upgraded coal products for local or export markets and synthetic oil which can be refined into fuel sources such as diesel and petrol."

The ministers stated that the project would involve the construction of "a pre-commercial lignite upgrading and processing plant" which would produce 3 products comprising and "oily coal, which can be separated into high energy products: synthetic crude (Syncrude) and micronized upgraded coal", " upgraded coal – for use in blast furnaces as Pulverised Coal Injection (PCI) for steel manufacturing", and "synthetic crude oil."

Company finances

In 2011 IER recorded a consolidated loss of $24,609,438. In 2012 IER racked up another $6 million in losses.

In an April 17, 2013 letter Nigel Young, a partner at the auditing firm Ernst & Young, noted that in the 2012 calendar year IER reported a loss of $6,004,208 and that "the consolidated entities current liabilities exceed its current assets by $2,229,716". Young then noted that:

"The ability of the consolidated entity to continue as a going concern is dependent on generating sufficient income to cover its costs and obtain necessary finance to continue its operations and in particular realise the value from material intangible assets included in the balance sheet of $132,169,540 ... the directors are using their best efforts to ensure that such sources of funds are obtained and continue to be available in the future however, should losses continue and future funding not be successful, the consolidated entity may be unable to continue as a going concern."

In the last four years eleven directors of the company have come and gone. In August 2012 three directors, including the company Chairman, resigned.

The financial returns lodged with the Australian Securities and Investment Commission for 2012 reveal a company struggling to stave off collapse. In that return an April 17, 2013 letter from the firm's auditor -Nigel Young, a partner at the auditing firm Ernst & Young - noted that "the directors are using their best efforts to ensure that such sources of funds are obtained and continue to be available in the future however, should losses continue and future funding not be successful, the consolidated entity may be unable to continue as a going concern."

Yallourn project

In July 2009 Ignite Energy Resources and TRUenergy (now known as EnergyAustralia) announced that they had entered into a Memorandum of Understanding (MoU) to develop a commercial coal to liquid fuel, chemical coal drying and fertiliser proposal demonstration plant at TRUenergy’s Yallourn mine. "IER's operating reactor at Somersby, NSW converts one dry tonne of Gippsland Basin lignite into approximately two barrels of oil and 0.6 tonnes of high ranked coal. Independent expert reports predict that the Company's coal, compared to lignite, will reduce CO2 emissions by 40% when used for power generation," the companies claimed. "Work is expected to begin in mid-July with the initial plant operating by the second quarter of 2010," the companies media release stated.

The companies initial media release stated that the initial plant was designed to process 20,000 tonnes of brown coal a year with a proposed plant at the Yallourn mine comprising three 20,000 tonne a year units. The three units, the companies claimed, could produce "60,000 barrels of IER high grade oils and 18,000 tonnes of high-grade dry coal."

Two and a half years after the original announcement, the federal Minister for Resources and Energy, Martin Ferguson "opened" what his media release stated was the "new biofuels commercial demonstration facility" at the site. At the opening, to which the media were invited, Ferguson stated that the plant, which was owned by Ignite Energy subsidiary Licella, "has been supported through a $2.3 million grant from the Australian Government’s Second Generation Biofuels Research and Development (Gen 2) Program." Ferguson also announced that Ignite and Licella had reached an agreement "to locate a commercial demonstration plant at Yallourn Power Station, in the Latrobe Valley, scheduled for mid 2012." The trial, Ferguson said in a media release, "the prospect of this venture demonstrates the opportunities that may be available to utilise the Latrobe Valley's brown coal resource in a way that reduces greenhouse gas emissions and could provide much needed jobs to the local community."

Ferguson also announced that in a second agreement, Licella and Norkse Skog Australasia formed a joint venture company, Licella Fibre Fuels "to transform multiple biomass feedstocks, including forestry residues, agricultural waste and energy crops into bio-crude oil." Ferguson's media release also stated that Licella had enetered into a Memorandum of Understanding with Virgin Australia to "support the commercialisation of a process to convert biomass into sustainable aviation fuel. Under the MoU, Virgin Australia and Licella will explore the potential of the Licella technology to produce aviation fuel, with the aim of supporting its certification and reaching a commercial off-take agreement."

Environment Victoria's Mark Wakehan told the Latrobe Valley Express that "it would be nice for once to see ministers like Martin Ferguson looking at opportunities beyond coal in the Latrobe Valley and Gippsland. Unfortunately to date it seems that they view the region as a quarry."

Exploration interests

The Department of Primary Industries lists Ignite Energy Resources as the title holder of EL 4416, an extensive exploration licence for the development of brown coal. The licence was previously held by Victoria Coal Resources. In October 2010 Victoria Coal Resources stated that "the Company’s principal asset is the brown coal rights of EL 4416. The licence area is located within the Gippsland Basin region of South East Victoria and covers approximately 3,700 square kilometers. The in-situ brown coal quantities are estimated to be in excess of 200 billion tonnes with approximately 14 billion tonnes within the measured and indicated resource categories."

Related port projects

A March 2009 article about IER's coal-to liquids dreams with EL 4416, stated that "IER’s long term plans will see the export of liquid and solid products from Ignite Energy. The ports under consideration for this export activity are Barry Point in South Gippsland and the Port of Hastings in Western Port. The Barry Point area has been used for many years as the marine supply base for the offshore Gippsland Basin oilrigs. Currently, the Barry Point terminal can handle ships up to 5,000 tonnes in capacity. IER plans to develop a larger marine terminal around Barry Point to handle much larger ships. As for the deep water Port of Hastings, the Victorian Government is planning significant upgrades to its infrastructure to allow bulk material exports. However, the Victorian Government would need to develop appropriate rail infrastructure to allow transportation of the bulk products from the IER projects from South Gippsland to Hastings. Meanwhile, liquid exports would require pipeline infrastructure." A map with the article showed notional transport infrastructure options as being to export via the port of Geelong, to the west of Melbourne, or via Barry Point or the adjoining Port Anthony or the Port of Hastings.

Solid Energy Spurns IER

In its 2011 annual report, Solid Energy -- a New Zealand government-owned coal mining company -- noted that "in the year, we assessed a new transport fuels technology under development by Australian company Ignite Energy Resources Pty Ltd, but did not consider that the very early development status of this technology justified proceeding to a full licence agreement at this time."

Personnel

Board of Directors

As of February 2014 Ignite Energy's Board of Directors is listed on the company website as being:

• Larry Ciccarelli, Chairman,
• Dr Len Humphreys, Chief Executive Officer,
• Matthew Reynolds, Non-executive Director,
• Jim Overton, Non-Executive Director
• Paul Axon, Non-Executive Director

Former directors

• Anton Rosenberg, Chairman, resigned August 8, 2012.
• Ian Ross, Executive Director, resigned August 16, 2012.
• Will Jephcott, Non-Executive Director, resigned August 23, 2012.

Lobbyists, industry group membership and PR firms

The Victorian government's lobbyists register indicates that, as of May 2014, that Ignite Energy Resources lobbyist is Scott Pearce from the consultancy firm CNC Project Management. (A copy of the page from August 2013 is archived here. Neither Ignite Energy Resources or Licella are listed as having a registered federal lobbyist.

However, Ignite Energy Resources is a member of the Victorian division of the Minerals Council of Australia, the peak mining industry lobby group in both Victoria and nationally.

Maxicom Public Relations, a Sydney-based PR firm was working for IER in 2011. Working on the account were the firm's Managing Director, Peter Cassuben and Jackie Holt.

IER and other service providers

• Bankers: Commonwealth Bank of Australia
• Financial Advisor: Rothschild Australia
• Lawyers: HBL Ebsworth

Contact details

Sydney head office
Level 3, 90 Mount Street
North Sydney
NSW 2060
Australia
Phone: +61 (2) 9929 9007

Melbourne office Ignite Energy Resources
Level 9, 267 Collins Street
Melbourne, Victoria 3000
Australia

Tel: +61-3-8600 7000
Fax: +61-3-8600 7099
Website: http://www.igniteer.com/

Articles and resources

Related GEM.wiki articles

• DICE Development Network
• Researching coal in Victoria
• Victoria and coal

• Australia and coal
• Carbon Capture and Storage
• Carbon Capture and Storage in Australia
• New South Wales and coal
• Queensland and coal

External resources

• Ignite Energy Resources, "Minister inspects ground breaking coal emissions abatement technology ", Media Release, December 14, 2011.
• Ignite Energy Resources, Ignite Energy Resources Current & Historical information, Australian Securities and Investment Commission, September 2013.
• Ignite Energy Resources, "Ignite Energy Annual Report to the end of 2012", Australian Securities and Investment Commission, May 2013.
• Ignite Energy Resources, "Change to company details, Australian Securities and Investment Commission, April 2011.