AFC Energy (AFC, 12p, £15.32m) Has signed a binding heads of agreement with Linc Energy and B9 Coal limited of Australia to integrate AFC’s industrial scale liquid electrolyte fuel-cell into Linc’s underground coal gasification projects. By burning coal underground in a controlled fashion the major elements of the energy stored within the coal is released and extracted as gas, without major environmental disruption. Currently the gas is burnt in engine based generator sets which is inefficient, by using a fuel cell the overall system efficiency will increase sharply. The systems will use the next stage of AFC’s fuel cell development, the 50kW unit, as the base building block. AFC has granted a 2 year exclusive on AFC’s technology for 2 years and purchase the first 50kW unit within the next 5 months for £200,000 (payable in instalments). Linc has been granted the option to extend to perpetuity the exclusivity for a share investment of £2.3m at the share price at the time of the decision. AFC will receive the cost of the fuel-cell, followed by a royalty based on the profits generated by the use of the fuel-cells. The announcement firms up a second market for AFC’s fuel cells, in addition to the Chlor-Alkali producers, and begins the process of establishing higher rated repeat royalty revenues. While still in development this announcement can only serve to highlight the pot4ntial upside as AFC moves to commercial sales – ahead of Ceres Power and Ceramic Fuel Cells which both command much higher valuations.