agm report

Well as promised here is my AGM report, written in the airline lounge on a trip to Europe.
I'll assume that everyone can read the slides on the ASX announcement, so won't repeat that info here.

Btw thanks to Bigdig for his earlier short report.

Malcolm opened with overview of current positioning and then asked Rob to elaborate.

Kingaroy Legal Action - a clear shift in QLD Government approach was seen recently, as per recent announcement, but it appears that there is a real appreciation of what could lie ahead for them. Having said that no Government is going to be battered to submission, so my guess is that if there is to be a settlement out of court (and I for one would favour that) the settlement will enable a clean break to be amde, and alow CXY to get on with business elsewhere.

One point of emphasis was that the QLD position change came after the "discovery" phase, where personal memo's and the like are made available to the other side. Maybe we now know why Bradbury was moveed on quickly!

Personal note: a win win from here would be a clean break and a sum payable back to CXY. Having been involved in similar things with otehr State governments, I don't consider some of the figures quoted here for CXY's loss to be realistic. Any settlment is going to be much closer to the actual costs lost, not goodwill, and future profits etc.

Project Progress - It seems quite clear that CXY's management is now expecting the order of projects to be led by Indonesia (at least one project) followed by Mongolia and then China. The Indonesia timescale was said to be 18 to 24 months for gas production, but it appears there are at least two significnt parties progressing projects, each for a 30MW pilot plant in Sumatra. More importantly, there appears the perfect trifecta of CXY, a willing and encouraging Government and a significant industry player, Medco being one and a "large stock exchange listed resource player" as the second. My guess is an Indonesian project, one or mybe two, announced in the first quarter 2013 at latest. Either project needs a Coal Licence but Government is supportive. GOVERNMENT IS SUPPORTIVE!

Additonally, Asian Development Bank very supportive of power generation projects in Indonesia, so funding not expected to be an issue at all. ADB expecting 60:40 Debt to Equity but CXY asking for 70:30. Board is also well aware of dilution into CXY!

Kandoman Resources - goal to explore asset values. Over next twelve months drilling will prove up a JORC compliant resource for Mckensie of between 120 and 170 MT, to join the 360Mt at Wandoan. Mckenzie is directly between two operating mines at Jellinbah Coal and Yarrabee Coal. Encouraging in its own right.

CXY will "sell down" equity in Kandoman Resources for fund raising, perhaps 20 to 40 per cent for initial funds. View appears to be to spin out or sell or maintain, all good until such time as value is known. Initial funding into Kandoman expected first quarter 2013.

Wandoan resource said to be worth $50 to $54 million by industry normal scaling!

Road Show - recently completed and Aussie equivalent over coming ten days or so. Lots of interest regarding UCG rather than Kandoman Resources but lots there too!

Boring Bits - Resolutions all passed by show of hands. personal comment, what makes a shareholder come along to the AGM, not really have a moan or groan at any resolutions but then vote against? How does that help either him or management in understanding where he was coming from? Some folk are odd eh?

Reso 1 passed 4/1, 2 passed 6/1, 3 passed 5/1, 4 passed 7/0, 5 passed 8/0, 6 passed 6/1 and 7 passed 8/0.

Summary - like Bigdig I have come away very positively, noting that ASOF have no real reason not to take the funding at 0.006 and sell back at 0.007 for a 14 per ent gin over short term, but that a single settlement at Kingaroy would make such a need for such raisings redundant.

I saw a lots been done over Rob's first 100 days. I saw a clear path to turnround, namely, settle Kingaroy, then one or more projects in Indonesia, at same as prove up Mckensie resource to JORC compliance, thus progressing other projects etc.

I'm not allowed to make investment recommendations but I can confirm I've been a recent buyer, and will continue to do at these levels. Good luck all, soon its won't be luck you need.