The company today said London Stock Exchange-listed Fortune, which already has Chinese gas pipeline and compressed natural gas plant interests, earned 60% of the permit by contributing $US2 million ($A2.4 million) in drilling and production testing.

It has already funded the latest work at Liulin, in the Hedong coal field region 500km southwest of Beijing, including two new production test wells.

Fortune also recently began pilot production at the EP1 and EP2 CSM wells in Liulin Block. Both wells have been hydraulically fracture stimulated to target coal seam number 8/9.

Molopo said they are now producing small controlled amounts of water and the dewatering phase for the CSM wells is expected to last several months before gas production begins.

The company said coring sample results for EP1 and EP2 were positive. The total coal thickness for the three major coal seams was 11.4m for EP1 and 8.9m for EP2, while the gas content averaged 9 cubic metres per tonne, as measured by gas desorption testing.

Injection/falloff testing of permeability, an indicator of potential gas recovery rate, also gave encouraging results, it said.

In order to meet regulations for certification of gas reserves, Fortune now plans to drill three CSM data wells for analysis of permeability and desorbed gas content in each major seam.

Molopo holds a 40% stake in the Liulin Block, while Fortune now holds the remaining 60%.