something is brewing here, page-20

Boot

With no particular knowledge ... plenty of
postulation ... and my active imagination ... I would think funding still has to be finalised.

My take on one potential scenario is this ...

The preferred funding would be a staged affair where tranches would be offered to complete stages and would be ongoing if milestone targets were hit.

Despite an advanced state of preparedness for Kingaroy, they wont start the trial burn until a funding package is in place that goes beyond the trial burn to enable rollout of the 40 MW power station (he got caught out before at Chinchilla when development funding wasn't forthcoming, despite a very successful burn).

The presentation last yr indicated a 60:40 debt:equity funding for Kingaroy ... requiring $55 mill for 40 MW and $113mill for Cougars share of the 400 MW expansion where they supply gas to a third party owning a new 360MW power station.

The $55 mill I presume will require debt of $33mill and equity of $22mill ... getting 179mill CXYO exercised at 5c will raise about $9mill with no further dilution, meaning they still have to raise a further $13mill by equity or other means. The debt funding I presume will largely be associated with the syngas turbines and I expect General Electric or similar to provide lease finance, leaving perhaps up to say $5mill to $10mill to be raised conventionally via the debt market.

To summarise , the task for Cougar is to raise something like $5mill to $10mill via the debt market and $13mill equity by direct raising or other means ... given that options will be exercised and GE or similar is good for the lease finance, it seems manageable to me.

Enter Essar ... a nice big buddy to have imo. The attraction of Cougar to Essar (the Indian MOU partner capitalised at $20bill) is that Cougar pretty much have "proof of concept" Kingaroy on the blocks and waiting for the starters gun ... ucg is a very attractive energy solution for developing nations like India that are well endowed with coal ... a $5mill to $10mill loan to Cougar and say a convertible notes issue priced for success (ie something not too dilutive like 30c or so) to provide the $13mill equity is chicken chaff for Essar. Success at Kingaroy 40 MW will undoubtedly put a rocket under Essar's ambitions for ucg in India.

Exactly how Cougar UK and Cockatoo Coal influence the above potential scenario is beyond me at the moment.

Regards
Dex