GulfX said phase one consists of drilling 11 holes in the Clinton area in Mineral Exploration Licence 3896.

Drill core samples collected during drilling will be sent for coal property analysis and will also be used for laboratory scale test work to more accurately define coal to liquid yields, the company added.

Drilling in the Clinton area is expected to be completed by the end of June with subsequent phases to follow at Whitwarta and Beaufort.

GulfX acquired the mineral exploration rights from its takeover of Syngas Energy earlier this year, and aims to produce gas and clean diesel from South Australian lignite deposits.