Marathon has been working on the deal since October, when Allied Resource Partners’ ARP TriEnergy became its largest shareholder after it acquired 19.99% of the company formerly held by Bentley Capital.

In December, Marathon's board signed a non-binding term sheet to undertake due diligence on a farm-in of the Leigh Creek energy project in central South Australia, which culminated in yesterday's vote.

The deal changed over the following months, with Marathon eventually agreeing to purchase a private company started by Justyn Peters and David Shearwood – effectively initiating a reverse takeover.

Former Marathon shareholders will retain 40% of company, while the ARP TriEnergy shareholders will own 60% of Marathon.

Marathon now owns 100% of the Leigh Creek project and will attempt to commercialise its in-situ coal gasification technology in those coal fields.

Leigh Creek is 500 kilometres north of Adelaide, and is one of the state’s only developed sources of coal supply, which feeds two ageing coal-fired power stations located near Port Augusta and owned by Alinta Energy.

South Australia has limited but large low rank sub-bituminous coal deposits, which in recent years have been the focus for planned large scale coal-to-gas and coal-to-liquids proposals, none of which advanced to the pilot stage.

Marathon’s project is a newer option, centred on the granted PEL 650 and the surrounding PELA 647.

The LCEP proposes to develop an ISG process, targeting unmineable coals between 300 metres and 1500m using oil field technologies similar to underground coal gasification, but rather than igniting the seams Marathon will inject oxygen into the seam and extract the syngas from a second well.

It would then be available for power, gas, and chemical purposes.

Marathon said Leigh Creek had excellent infrastructure, power and other services as well as a local workforce and rail access to Port Augusta.

Further, the project is outside the Great Artesian Basin, with drilling intended to occur in locations where water at depth is saline.

ARP’s principals were previously involved in Liberty Resources, which recently scrapped a similarly ambitious plan to develop stranded coal assets in Queensland for energy and fertilisers at a cost of $4 billion.

Peters, who joined the Marathon board last year, spent six years with Australian UCG pioneer Linc Energy, and was involved in a bitter takeover fight between Liberty and Hong Kong-based Auto Investment International that eventually saw Liberty seek safety in the IT sector.

Marathon believed it would be able to use a model broadly similar to Liberty’s aspirations by selling gas into the Moomba-Adelaide pipeline, which was 125km away, or it could produce ammonium nitrate for fertilisers and explosives, or remote minesite power.

TriEnergy has already lodged its first drilling application and has started chatting with people who might like to buy its gas, should it be successful in extracting it from the ground in commercial quantities.

The planned drilling will define a JORC resource later this year, so the company can calculate likely gas volumes. Past work suggests there could easily be 350 million tonnes of coal in the ground.

Marathon said its technology did not need proving-up given ISG had been in commercial operation in Russia for more than 50 years and was now being operated commercially in South Africa and China.

The drilling was appraisal, not exploration, Marathon argued, and it aimed to have gas sales under way within three years and reserves sufficient to support pipeline planning, if not gas sales into the Gladstone LNG projects or east coast markets.

TriEnergy also has four other applications around Leigh Creek, PELA 643 in the southern Cooper Basin and PELA 649 located on the Eyre Peninsula, south of Lock, close to the Lock coal project.

ARP had also discussed a number of developments in the Northern Territory with Central Petroleum, but they fizzled out.

South Australia is littered with projects aimed at developing the coal deposits that have gone nowhere.

Altona Resources and Syngas Energy were each working toward massive coal-to-liquids projects in the Arckaringa Basin.

Altona claimed to have a resource equivalent to 7.8 billion barrels of clean-burning fuel for Australia and the world, although it was still looking at available options to find the most suitable method of producing diesel, methanol and other petrochemicals from its project areas around the Wintinna resource.

Last year, the London-listed company lost CNOOC as a joint venture partner and gained two new farm-in partners – Sino-Aus and Wintask – and it is still pursuing a 15,000 barrel and 6200 tonne per day methanol plant.

Syngas maintains its St Vincent Basin coalfields, but work on the Clinton project has stalled and the Moorbank deposit was allowed to lapse last year. It is likely that Syngas will allow all its SA permits to wither away, while a new shareholder group re-focuses it on Asian energy opportunities.

Strike Energy also conducted pre-feasibility studies over the Kingston coal deposit in the Gambier Basin for a 10,000bpd liquids project, but its FuturGas project has fallen off the radar in recent years and the licence over the Kingston deposit was recently handed back to the government.