Longreach Oil is moving forward on its pivot to infant formula – but first it has to get rid of its mining leases.

Infant formula has been one of the ASX’s hottest themes in recent times with the likes of JatEnergy and Aus Dairy Farms joining more established plays such as a2 Milk, Wattle Health, Bubs and Bellamy’s.

JAT Energy (ASX:JAT) skyrocketed in December when it sent its first shipment of milk powder to China in an exit from coal.

Longreach Oil and 20 per cent-owned subsidiary Brisbane Petroleum together hold three petroleum licences in Queensland’s Surat Basin and have been working to offload them since 2011.

In November Longreach told investors it had agreed to sell all its exploration and production assets to Chelsea Oil for about $4.2 million.

Today, Longreach Oil (ASX:LGO) told the market the leases were still up for grabs.

“The sale of BPL’s interest to Chelsea Oil Australia has not yet been settled and the transfer application in respect of BPL’s interest is still pending. The transaction is no longer within the exclusive period and BPL is able to receive offers.”

Longreach expected to sell its mining assets before completion of the Happy Valley Milk transaction and re-admission to the local bourse.

The proposed site of Happy Valley Milk's plant.
The proposed site of Happy Valley Milk’s plant.

Happy Valley Milk has no facility as yet, but has land use permits to establish and operate a milk processing, blending and packaging plant near Hamilton in New Zealand’s north.

The location is in one of New Zealand’s biggest catchment areas for A2, organic and pasture-fed milk herds.

Quarterly figures showed the company had just $6000 left in the kitty at the end of the quarter and estimated outflows of $40,000.

As part of the agreement, Happy Valley will raise $2.5 million to fund its development in the time leading up to its reinstatement to trade, at which time LGO will raise a further $3 million.

LGO shares have not traded since May last year, when they were at 0.8c.