HOUSTON, April 08, 2019 (GLOBE NEWSWIRE) -- Synthesis Energy Systems, Inc. (SES, Company) (NASDAQ: SES), today
announced that the Company has entered into a Technology Purchase Option Agreement with Australian Future Energy Pty Ltd (AFE) for
the sale of its subsidiary company, Synthesis Energy Systems Technologies, LLC (SEST) which owns the SES Gasification Technology
(SGT) and its related SGT global business undertakings.
SES currently holds approximately a 36% ownership in AFE and is an active member on its Board of Directors. The
Parties have agreed to an option period ending July 31, 2019 in which AFE will arrange for its financing to complete the
transaction and SES will secure its necessary consents and the parties will complete the required definitive agreements.
The Technology Purchase Option Agreement establishes the major commercial terms to be set forth in the
definitive agreements. Under these terms, upon completion of the definitive agreements, SES agrees to transfer 100% of its
ownership of SEST to AFE, which includes its SGT related intellectual property, know-how and relevant patent rights, except that
SES will retain all its ownership rights to the SGT technology business for China.
SES’ President and CEO, Robert Rigdon, stated, “We have completed several years of technology commercialization
efforts in China, building commercial projects which operate efficiently and reliably providing SGT syngas for methanol production
and for industrial syngas. However, we have not been able to deliver adequate finance results from China to allow us to continue
supporting the cost of SGT technology commercialization on our own. After careful evaluation of options to continue SGT
commercialization, we believe AFE’s proposed acquisition of SGT to be our best evaluated opportunity. Through this arrangement SGT
can provide AFE’s Gladstone Energy and Ammonia Project and future projects with a lower cost to build and operate. As an
owner in AFE, we believe that by building in Australia we can have higher confidence of financial results in the future once the
project is operating.”
Australian Future Energy’s Chief Executive Officer, Kerry Parker, stated, “We are very pleased to reach this
agreement with SES. SES is one of the founders of our company and is a currently a major shareholder in our company. Our Gladstone
Energy and Ammonia Project is our number one priority. The Gladstone Energy and Ammonia Project is being designed to produce
approximately 700 tonnes per day of ammonia and approximately 11 petajoules of pipeline quality gas.
AFE has achieved significant development progress over the last 12 months with the Gladstone Energy and Ammonia
Project, including:
- Being granted “Significant Project Status” by the Queensland Government – which will assist with streamlining the project
approval and permitting processes;
- Commencement of the EIS (Environmental Impact Assessment) Process;
- Acquisition of 120 hectare development site in the Gladstone State Development Area;
- Signing of long-term offtake agreements for 100% of the project’s ammonia and pipeline quality gas – all with Tier 1 ASX
listed companies;
- Agreement with an international Tier 1 EPC organization on the detailed design and engineering for the project; and
- Progress towards the securing of required project finance for the development of the project.
As consideration, AFE has agreed to pay to SES:
- One million fully paid shares in AFE upon signing this agreement;
- Upon signing the definitive agreements, AFE will pay SES a total of $5.8 million in cash with the first $2.0 million being
payable in three equal tranches. The first tranche is to be paid before the end of the option period with the second tranche paid
no later than six months after the first tranche and the third tranche paid no later than 12 months from the date of payment of
the first tranche;
- A final payment of $3.8 million is to be paid to SES upon the earlier of five years or AFE’s closing of the construction
financing of adequate scale to allow for release of detailed engineering and placement of orders for long-lead items and for one
or more of the gasifier reactors or gasifier heat recovery steam generators for its Gladstone Energy and Ammonia Project, its
first gasification project in the region.
In addition, for a period of three years from the Effective Date, SES shall own the exclusive right to either
hold or offer for sale the SGT technology for use in the countries of India, Brazil, and Poland (Carved-Out Regions). AFE is not
entitled to receive any share of the payments that may be received by SES during this three-year period, from the sale or usage of
the SGT technology in the Carved-Out Regions other than its reasonable time and expenses associated with assisting SES to complete
the required technology transfer to a Carved-Out Region buyer.
Other terms of the agreement set forth the process for which the parties will, amongst other things, complete
the SGT technology transfer, secure necessary consents and approvals, segregate the SGT business in China and terminate or replace
existing agreements between SEST and AFE related to SGT in Australia.
About Synthesis Energy Systems, Inc.
Synthesis Energy Systems (SES) is a Houston-based technology company focused on bringing cleaner high-value energy to developing
countries from low-grade coal and biomass natural resources through its proprietary gasification technology. The technology, which
is licensed from the Gas Technology Institute, enables greater fuel flexibility and efficient small-scale operations close to fuel
sources. Fuel sources include low-rank, low-cost high ash, high moisture coals, which are significantly cheaper than higher grade
coals, many coal waste products, and biomass feedstocks. For more information, please visit: www.synthesisenergy.com.
About Australian Future Energy Pty Ltd.
AFE is a privately owned Australian company founded in 2014 by its primary shareholders being Mr. Edek Choros and Synthesis Energy
Systems, Inc. (“SES”). SES is a US based NASDAQ listed global leader in flexible fuel clean syngas production with high
efficiency and low-cost syngas production. AFE was established to secure an ownership position in local resources, such as coal and
biomass for production of fuel gas and synthetic natural gas for use in power generation and the production of agricultural
chemicals and explosives using SES gasification technology that will reduce carbon dioxide emissions and support Australian
industry and regional growth. As part of the formation of AFE, SES and AFE entered into a Master Technology Agreement whereby
AFE will exclusively use SES technology for its gasification projects, while SES will exclusively use AFE as its channel to the
Australian market. AFE is currently seeking to develop energy projects that will produce synthesis gas “syngas” - an alternative to
natural gas - for use in large scale base load power generation (of the order of 350MW per individual project) and for use as a
feedstock for the production of agricultural chemicals such as ammonia, urea, and explosives. AFE is well advanced with its
plans for the development of the Gladstone Energy and Ammonia Project, which is proposed to be developed by AFE’s wholly owned
subsidiary company, Gladstone Energy and Ammonia Pty Ltd. The proposed project is aimed at producing approximately 20 PJ of
pipeline specification syngas, from its first coal gasification project. Approximately 9 PJ of the pipeline specification syngas
will be further processed to manufacture approximately 700 tpd of ammonia (approximately 230,000 tonnes per annum), and
approximately 11 PJ per annum of pipeline specification syngas for local markets and industrial users. For more information, please
visit: www.ausfutureenergy.com.au
Forward-Looking Statements
This press release includes “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as
amended, and Section 21E of the Exchange Act. All statements other than statements of historical fact are
forward-looking statements and are subject to certain risks, trends and uncertainties that could cause actual results to differ
materially from those projected. Among those risks, trends and uncertainties are the ability of Batchfire Resources Pty Ltd
(“BFR”), Australian Future Energy Pty Ltd (“AFE”), and Cape River Resources Pty Ltd (“CRR”) management to successfully grow and
develop their Australian assets and operations, including Callide, Pentland and the Gladstone Energy and Ammonia Project; the
ability of BFR to produce earnings and pay dividends; the ability of SES EnCoal Energy sp. z o. o. (“SEE”) management to
successfully grow and develop projects, assets and operations in Poland; our ability to raise additional capital; our indebtedness
and the amount of cash required to service our indebtedness; our ability to find a partner for our technology business; our ability
to develop and expand business of the TSEC Joint Venture in the joint venture territory; our ability to develop our business
verticals, including DRI steel, through our marketing arrangement with Midrex Technologies; our ability to successfully develop our
licensing business; our ability to continue as a going concern; the ability of our project with Yima to produce earnings and pay
dividends; the economic conditions of countries where we are operating; events or circumstances which result in an impairment of
our assets; our ability to reduce operating costs; our ability to make distributions and repatriate earnings from our Chinese
operations; our ability to maintain our listing on the NASDAQ Stock Market; our ability to successfully commercialize our
technology at a larger scale and higher pressures; commodity prices, including in particular natural gas, crude oil, methanol and
power; the availability and terms of financing; our customers’ and/or our ability to obtain the necessary approvals and permits for
future projects; our ability to estimate the sufficiency of existing capital resources; the sufficiency of internal controls and
procedures; and our results of operations in countries outside of the U.S., where we are continuing to pursue and develop projects.
Although we believe that in making such forward-looking statements our expectations are based upon reasonable assumptions, such
statements may be influenced by factors that could cause actual outcomes and results to be materially different from those
projected by us. We cannot assure you that the assumptions upon which these statements are based will prove to be correct.
Please refer to our latest Form 10-K available on our website at www.synthesisenergy.com.
Contact:
Synthesis Energy Systems, Inc.
Investor Relations:
Phone Number: (713) 579-0600
Email: ir@synthesisenergy.com