10 September 2007 NEW FOCUS ON VICTORIAN BROWN COALS FOR POTENTIAL UNDERGROUND COAL GASIFICATION Cougar Energy Ltd (ASX Code: CXY) is to investigate the potential for applying the Underground Coal Gasification (UCG) process to Victorian brown coal resources under a Memorandum of Understanding (MoU) with Victoria Coal Resources Pty Ltd (“VCR”) announced today. Cougar Energy’s ultimate goal is to use the UCG process within the vast coal fields to produce gas for cheaper and more environmentally friendly power generation and for liquid fuel production. VCR sees this as a means of expanding the utilisation of its coal resource. Under the terms of the MoU, Cougar Energy will review data defining the brown coal deposits contained within Exploration Licence 4416 (“EL 4416”), held by VCR under a farm-in agreement with CBM Resources Pty Ltd, to determine their suitability for application of the UCG process. EL4416 covers an area of about 1 million acres adjacent to the Latrobe Valley in Victoria, and is estimated to contain 50-100 billion tonnes of brown coal situated under a limestone layer*. The MoU will remain in place for one year with a 12 month extension by mutual agreement of the parties. In the event that Cougar Energy gives notice that the potential for a UCG project exists in Designated Areas within EL4416, the parties will form a 50:50 Joint Venture to pursue its development. Victorian brown coals have a high moisture content and low calorific value, and techniques for drying the coal for later use can be expensive. Use of the coal in conventional coal-fired power plants results in low efficiencies and high CO2 emissions per MWh of electricity generated. The UCG process involves the in-situ conversion of coal into gas which is recovered from production wells, and which can be used for power generation or liquid fuel production. If the process can be applied to the brown coals and the product gas used in combined cycle power plants, the potential exists for achieving low power costs in association with lower greenhouse gas emissions, as well as the production of a low cost feed gas for the liquids plant. Both Cougar Energy and VCR are excited about working together in Victoria to investigate the potential for this alternative and more efficient use of the State’s huge brown coal resource. In accordance with the Listing Rules of the Australian Stock Exchange Limited, the information in this report relating to coal resources has been compiled by Rod Webster , who is a member of the Australasian Institute of Mining and Metallurgy, and a full-time employee of AMC Consultants. Mr Webster has relevant experience in relation to the type of deposit under consideration to qualify as a Competent Person as defined by the Australasian Code for Reporting of Minerals Resources and Reserves. Mr Webster consents to the inclusion in this report of the matters based on his information in the form and context in which it appears. *There has been insufficient exploration to define a Mineral Resource and it is uncertain if further exploration will result in the determination of a Mineral Resource. Dr. L.K.Walker Managing Director Media contact: Dr Len Walker John Field Managing Director, Cougar Energy Field Public Relations Tel: 03 9909 7200 Tel: (08) 8234 9555
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