help, page-15

Boris, Bill and Sskim

As I see it:

* CNX had a 100 day trial from about Oct 2008 and for sometime after continued to produce a reduced amount of syngas and lately has been conducting remedial works on a lateral well within their original gasifier and has announced plans for a new gasifier.
* CNX are about two months late so far in producing electricity from their 5MW reciprocating engine generator and if being able to generate is dependent on the new gasifier it could well be another few months or more until electricity might be produced.
* CNX has not produced commercial quanties of syngas if by commercial it is meant at a rate that would support a project producing commercial returns ... a minimum 10-20 fold increase in syngas output would need to be produced to support anything commercial imo.
* CNX do have a syngas IP sourced from CSIRO that is yet to be proven commercially and in fact the core CRIPS operation is yet to be proven in a successful company trial.
* CNX have no commitment or timetable to produce diesel
* CNX have no timetable to produce fertiliser
* CNX do have a cornerstone investor in IPL who as far as I am aware are beddding down a realtively new CSG fertiliser plant in Qld and could be 5 yrs or more away from needing more product.

* CXY has just started a pre-production burn the UCG technology of which was proven in a three yr trial from 1999.
* CXY are licensed to use the UCG technology, the cost of which will be embedded in any represention of commercial performance for any project. Inclusive of the technology the IRR for Kingaroy at 400MW is something like 17%.
* CXY do have planning and an announced timetable to construct a 200MW stage 1 power station subject to approvals and finance ... this project is profitable and therefore commercial
* CXY do have other projects at very early stages for which there is stated intention to roll out similar powerstations.
* CXY do have a project for which one stated aim is to consider the viability of producing methane from syngas.


There is no doubt in my mind that an appropriate cornerstone investor in CXY would put a rocket under the share price ... I am talking of a serious refiner like Shell or Caltex, or a serious gas producer like BG, STO, BHP, Chevron, Petronas etc that will bring specific projects or classes of projects to life.

At this stage I query the real value to CNX of IPL ... their presence to date seems so passive and I dont sense any urgency to be producing more fertilisers for the foreseeable future. I also question the long tern value of CSIRO as they are never going to fund projects (it just isn't in their charter imo) and it is not at all clear what they are currently contributing in terms of IP after the initial technology seeding.

It just cannot be said with any conviction that CNX is more advanced than CXY and so I am with Mikayla querying the relative market capitalisations. Another poster noted that perhaps there was room for CXY to increase and CNX to decrease to reach fair value under current circumstances ... there is some wisdom in that view imo.

Cheers
Dex