Tassie Shoal Methanol Project Update

abarrelfullabarrelfull wrote on 09 Feb 2013 08:26

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MEO Australia Limited (ASX: MEO; OTCQX: MEOAY) provides the following update in relation to
the commercialisation progress of the first Tassie Shoal Methanol Plant (“TSMP1”).

Since MEO received Expressions of Interest in April, 2012 for long term supply of 8.3MTA of methanol from TSMP1*, indicative commercial terms including methanol pricing were provided by the major industry participants. Subsequent evaluation of these proposals has resulted in a short list of three preferred buyers with whom non-binding Letters of Intent (LOI) have been executed. The maximum total shortlisted demand exceeds the total supply capacity from TSMP1 with final quantities to be aligned with MEO’s equity supply available from TSMP1.

The shortlisted buyers are major participants in the methanol market with a strong focus on expanding their Asian businesses. The LOI’s provide the basis for the parties to further develop commercial terms for the sales and purchase of methanol from TSMP1 with a view to maturing these LOI’s towards binding Methanol Sale and Purchase Agreements.

Discussions with interested parties on broader strategic partnerships across the value chain including the acquisition of equity in TSMP1 are continuing in parallel. In this regard, MEO is developing a commercial relationship with an Asian industry participant on a non-exclusive basis for the purpose of developing TSMP1. The Asian industry participant is a multinational corporation with broad business interests including in upstream E&P, downstream chemicals and international trading businesses and is considering taking a majority interest in, and assuming operatorship of, the TSMP1 midstream development.

MEO’s Executive Manager Business Development Robert Zammit commented:
“TSMP1 represents a globally competitive methanol manufacturing facility and an opportunity for shortlisted buyers and potential equity partners to be foundation participants. As we mature the revenue side of the commercial supply chain and consider possible TSMP1 equity structures, we will sharpen our focus on the gas supply alternatives, including engaging with regional resource owners to present the TSMP1 development scenario for their consideration.”

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