Proactive Investors - Mosman Oil and Gas Ltd (LON:MSMN) told investors it has inked a non-binding heads of agreement which sets out a potential offtake for helium from its exploration block in the Amadeus Basin in central Australia.
The early-stage agreement is with Beijing Sinoscience Fullcyro Technology and Beltway Group.
It sets the scene for a more formal offtake arrangement to be agreed upon between the parties once more fieldwork has been completed - seismic and drilling, followed by resource and reserve estimation and project planning.
Commercial development planning has yet to be progressed by Mosman at the Amadeus project and there can be no certainty that formal agreements will develop from the HOA, Mosman noted in a statement.
It added that at present there would be many matters still to agree on with the potential offtake partners, including pricing, costs and the terms of any financial support which could form part of the more formal agreement in the future.
Nevertheless, the current non-binding agreement envisages that Fullcyro and Beltway will purchase 80% of the project’s helium from the wellhead and could provide Mosman with the equipment necessary for the production of helium.
It also anticipates that Mosman seeks agreement with Fullcyro and Beltway for engineering, procurement, construction and finance services to progress the project.
Timetables for the project and the partnerships have not been determined at this stage through the initial agreement.
Mosman has previously discussed a potential spin-out of its helium assets and operations into a separately listed vehicle and had previously flagged that it was in talks with Chinese groups over a potential offtake agreement.
The helium assets are held by Trident (LON:TRR) Energy, a subsidiary of Mosman. In June, Trident received support from the Australian government.
It previously hired industry consultant SRK to review the helium assets, which comprise the EP 145 and EPA 155 licences in central Australia, and it is anticipated that this work could be followed by a formal independent competent persons report.
In May, Mosman said it had decided to list its Australian helium assets in London based on the findings of a strategic review. A separate stock market listing for the Australian assets is in the best interests of the company in order to maximise value for shareholders, said chairman John Barr.