Under the agreement, Incitec agreed to pay $11 million for 55 million Metex shares at 20c each, or a minimum of 10.5% of Metex.

Incitec and Metex, which will soon rename itself after its subsidiary Carbon Energy, will also form a joint venture company on successful completion of the UCG trial demonstrating commercial production of synthetic gas (syngas).

The $20 million trial will be carried out at Bloodwood Creek in the Surat Basin, which has a defined coal resource of more than 100 million tonnes.

Metex said the companies are expected to investigate the viability of a 1000-tonne-per-day ammonia plant based on syngas from the gasification of the Bloodwood resource.

"This is a major development for the company and we are pleased to have the strategic backing of such a large and respected company as Incitec Pivot as we commence this landmark trial," Metex managing director Ian Walker said.

Incitec will be granted exclusive global rights to use the UCG technology to produce syngas for ammonia and ammonia-derived products, though Metex will retain the right to use the gas for all other products such as coal to liquids, power generation and other petrochemicals.

Meanwhile, Metex said it had paid Queensland driller Constellation Energy 15 million Metex shares to provide drilling services for the Bloodwood Creek trial.