WPG Resources has signed an MOU agreement with Evergreen Energy, a green energy technology solutions company, to jointly develop and commercialise Evergreen’s KFuel^® coal upgrading technology throughout Australia. The K-Fuel clean coal process, which upgrades low value sub-bituminous coals and lignite to higher rank thermal coal quality. K-Fuel is a new generation of energy processes that can significantly reduce air emissions and other pollutants from coal-burning power plants. It increases the heating value of low-rank fuels while decreasing the environmental impact of coal energy production. This is accomplished by refining coal before it is burned to increase energy densities and combustion efficiencies and reduce greenhouse gas emissions.

Evergreen’s 750,000 t/y demonstration plant at Fort Union in the Powder River Basin (PRB) in Wyoming, USA, operated from December 2005 to March 2008, when operations were idled as part of Evergreen’s response to the global financial crisis. Based on the feedstock, test work has shown that PRB coals can be upgraded from a calorific value of 4,500 kcal/kg and 31% moisture to 5,600 kcal/kg and 15.5% moisture. Generally similar upgrading results have been achieved with Indonesian coals. Test burns of the KFuel product in several US power stations have validated the process.

Under the MOU agreement (which will be converted into a binding joint venture (JV) agreement prior to 30 September 2011), WPG will contribute its coal assets in South Australia to the JV, and Evergreen will contribute its technology. The 50/50 JV will have the right to the first 10 Mt/y of upgraded coal produced anywhere in Australia using the K-Fuel process, and after that the first right to participate in new coal upgrading projects that Evergreen undertakes in Australia on terms to be negotiated in good faith at the time.

WPG’s South Australian coal portfolio consists of its Penrhyn deposit in the Arckaringa Basin south west of Coober Pedy, its granted Pidinga exploration licences in the western part of the state and at Lochiel North near Port Pirie, and an application for an exploration licence at Perfection Well south of Coober Pedy. Penrhyn is located approximately 20 km to the northeast of the Lake Phillipson coalfield held by ASX-listed White Energy. Penrhyn, like Lake Phillipson, is a sub-bituminous coal deposit. Penrhyn is located 25 km from the rail loading loop and a similar distance from the accommodation village and haul road that will be built for WPG’s flagship Peculiar Knob iron ore project, so it is ideally located to benefit from this infrastructure and the excess capacity that will be available early next year (subject to all necessary approvals) at the Company’s Port Pirie export facility.

In addition to entering into the JV, WPG has also subscribed $2 million to Evergreen’s $16 million capital raising announced on 2 February 2011. This investment has given WPG approximately 3.1% of Evergreen’s voting shares, with warrants to purchase further shares over a three year period. Funds for the Evergreen investment have been drawn from WPG’s established cash reserves and not from the equity raised late last year that was earmarked for the development of  Peculiar Knob and for general working capital purposes.

WPG Executive Chairman Bob Duffin said: “We are excited to be partnering with Evergreen Energy on implementing its K-Fuel technology for the Asian markets. The value K-Fuel brings forth will provide us with innovative coal upgrading applications to meet stringent environmental standards and increase energy output. The value of our coal resources will be enhanced very substantially through the upgrading process and we look forward to working with our existing partners and customers in and around the Pacific Basin region. This has been in line with our long-term strategy, previously articulated on a number of occasions.