Highlights
- Letter of Intent signed with leading Chinese gas equipment manufacturer, Langrun, for non-dilutive project financing over the first stage of Jade’s Phase 1 LNG Project development
- The deal contemplates financing of up to US$46m (A$70m), with key aspects including:
– Drilling and production operations for the next 18 wells at the Red Lake gasfield;
– Surface facilities to gather, process, and liquify the gas into a saleable LNG product;
– A low upfront capital outlay option, to be funded by future Jade revenue; and
– Potential to expand the terms to accommodate all 175 Phase 1 gas production wells. - CBM project financing of this nature accelerated Qinshui basin development in China
- The collaboration aims to leverage Langrun’s mid-stream gas processing expertise to optimise gas production for faster access to customer markets and ultimately early revenue.
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Jade Gas Holdings Limited (ASX:JGH) (Jade or the Company) is pleased to announce it has entered into a non-binding Letter of Intent (LOI) with Zhengzhou Langrun Intelligent Equipment Co., Ltd. (Langrun), a leading Chinese gas equipment manufacturer and operator primarily focused on Coal Bed Methane (CBM).
Midstream Gas Partnership to Support Production
As previously announced to the market, Jade has been in discussions over recent months with various potential partners with interest in project participation at various levels and structures. The Company has, after careful consideration, and in line with its commitments to develop the project for Mongolia, chosen to enter into an LOI with Langrun based on their proven operating and financial capability, and their previous experience with similar scale coal bed methane projects to Jades TTCBM Project. Notably, the widespread and prolific development of the Qinshui Basin in China was initially developed under similar project financing partnership structures.
The LOI with Langrun is designed to enable Jade to monetise the gas produced from initial production wells in Phase 1 development at the Red Lake gasfield through non-dilutive financing. Phase 1, which is an integral part of the Plan for Development of Operations (PDO), itself envisages a 175 well program across multi-well pad locations (Figure 1) and will focus on gas production from the three primary gas resource bearing seams, seam IIIb, seam IIIa and seam 0c.
Langrun’s expertise in the gas industry in China and in particular in CBM offers a great fit for Jade as the Company seeks options to fast track development of the Red Lake gas field and to optimise gas production for faster access to customer markets and ultimately early revenue.
Langrun’s core businesses include;
- Upstream Wellhead Development and Utilization covering wellhead construction, gas collection and equipment production which is an important next stage in the development of the Red Lake gasfield.
- Transportation Gas Equipment focuses on the research and development, the manufacturing of gas equipment including providing a full set of core equipment for gas stations and supporting the efficient application of natural gas in the transportation field. This core part of Langrun’s business provides core products including L-CNG/LNG pump skids, CNG hydraulic piston compressors and CNG/LNG dispensers.
- Industrial Gas Infrastructure Construction focuses on key industrial gas infrastructure, such as the construction and operation of pipeline gas projects to ensure the safe and stable supply of gas for industrial and civil use, as well as gas pressure regulating devices and metering skids for pressure regulation.
Subject to agreement of definitive documentation, and government and regulator cooperation and other approvals, the Red Lake gasfield could potentially be developed to cover purification, pipeline and other transport, compression (for potential production of CNG), liquefaction (for production of LNG), refueling station construction, enabling gas sales for vehicle, industrial and other markets. Jade could provide the gas source, suitable land for construction of facilities, and operational rights, while Langrun will arrange the financing for drilling and associated production services, supply and install gas processing equipment and manage production operations. The initial phase will focus on 20 wells, of which the first two production wells came online in June with gas breakthrough in August 2025 (see ASX Announcement 12 August and 20 August 2025).
In subsequent phases of project development, the partnership may expand to cover additional wells and broader project development of Phase 1. The LOI also sets out confidentiality obligations and preconditions for cooperation. The LOI is non-exclusive and does not create any immediate financial obligations on Jade or its CBM Project Joint Venture partner Erdenes Methane LLC; all future project-specific arrangements will require separate, formal agreements. A binding agreement is subject to commercial flow rates being achieved at the first two production wells, regulator and Mongolian government approval. A revenue sharing arrangement is to be negotiated based on each party’s contributions.
A partnership with Langrun could have a number of potentially significant advantages for Jade:
• A low upfront capital outlay option;
• The ability to retain its project ownership; and
• Clear pathway to earlier gas sales and long-term optionality with respect to its ability to fund future development across Red Lake and other permit areas.
Commenting on the LOI with Langrun, Jade Executive Director, Joe Burke, said:
“Langrun are well known to us, having also worked with our drilling contractor DWK for many years. Having a collaboration of this nature with a company with such vast experience in gasfield developments of this stage would be a huge advantage as we focus on the most appropriate pathway to develop the Red Lake gasfield.
Considering the high gas potential demonstrated now at Red Lake, our focus remains on moving quickly to gas production and customer markets for early revenue.”
Langrun CEO Wang Yongtao added:
“We look forward to working with the Jade Gas team to help the Company monetise its gas assets.
We share in Jade’s view that there is a significant opportunity for gas in the southern Mongolian region, and Langrun has the experience and understanding to execute on this vision to take advantage of the gas demand in the region, particularly for LNG and CNG where we have a rich experience.
Jade has the potential for a large-scale, long-term energy project that can have a significant impact on the energy dynamic of the southern Mongolia and northern China region, and we want to be a part of that.”
Link to ASX Release: https://bit.ly/4qY5BaX
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Contact details:
Elvis Jurcevic
Investor Relations
+61 408 268 271
[email protected]