In an announcement made today Metex said it had reached an agreement with CSIRO to acquire its shareholding for $A2.5 million in cash and 100 million Metex shares, subject to shareholder approvals.

The transaction will mean CSIRO becomes Metex's largest shareholder, with a 27% interest in the company.

It also means Metex will become the sole owner of the Underground Coal Gasification technology developed by Carbon Energy, which is set to be commercially tested next year in Queensland.

Metex managing director Ian Walker said the transaction is the most significant in the company's 14-year history and indicates the company's focus on UCG technology for the future.

He said by acquiring the 100% stake in Carbon Energy the company will be able to fast-track the UCG demonstration plant project being established in the Surat Basin and set to begin construction in January next year.

Engineering and design work on the demonstration plant have been completed and its location - at Bloodwood Creek, 30km west of Brisbane - chosen after Metex announced an inferred resource of 100 million tonnes of coal at the site earlier this year.

The resource is estimated to contain about 2000 petajoules of energy, half of which is potentially recoverable using the UCG extraction technology.

Walker welcomed CSIRO as Metex's major stakeholder and said Metex will now recruit a chief operating officer and director to drive the development of its energy assets.

Current Carbon Energy executive general manger Dr Cliff Mallett will be invited to the Metex board under the role of technical director.