Mantle is expecting to be granted exploration licence 5294 for the project and is looking at an exploration target of 1-2 billion tonnes of brown coal.

Both companies signed a non-binding memorandum of understanding to work towards establishing a 50:50 joint venture to explore and develop the project.

Exergen aims to build a 50 tonnes per annum demonstration facility that will utilise its Continuous Hydrothermal Dewatering (CHTD) technology which can reduce emissions by up to 40% when used with modern coal-fired power stations.

The Victorian technology company intends to export 50% of the coal from the Bacchus Marsh project while Mantle will use the CHTD for the other half of the production.

Mantle managing director Ian Kraemer viewed the MoU as an exciting step.

“Exergen has developed and proven a breakthrough clean-coal technology that promises to contribute to global energy security by reducing emissions from upgraded brown coal fired power generation,” he said.

“CHTD is a significant step towards overcoming the social and economic challenges posed by many nations’ continued reliance on sub bituminous coals for energy production.”

Kraemer noted that coal and other hydrocarbon energy would continue to be popular in the future, especially given the high demand from China and India.

“However, their use will move more towards extraction of the pure Hydrogen energy component, with a parallel reduction in the impact of the extraction process,” he said.

“This is where Mantle sees positioning itself to best capture the commercial benefits, and reduce the political risks, from developments in the coal sector going forward.”

The exploration joint venture agreement is expected to be inked within a year, while the mine development agreement is due to be finalised in two years.

The Baccus Marsh project is located on the northern end of the Otway Basin, 120 kilometres west of Melbourne, with plenty of rail, power and roads infrastructure running through the tenement.

Mantle noted that both surface and underground mining methods were used on a small scale in the area since World War II, and the coal was similar to or better than that found in the Latrobe Valley.

CHTD technology was successful in trials at a pilot facility in Beaconsfield, Tasmania.

According to Exergen, the core of its technology is a vertical autoclave that uses gravitational head pressure and a small amount of energy to transform the molecular structure of brown coal to remove up to 80% of its moisture content.

As brown coal is up to 70% water by mass, Exergen said its CHTD process could exert 100 atmospheres of pressure and 300C of temperature on brown coal slurry for a period of a few minutes.

Mantle shares closed up 77% or 2.3c to 5.3c yesterday.