coal drilling results, page-2

Thursday, 8 March 2007

COUGAR ENERGY CONSIDERS 40MW POWER STATION


AFTER DRILLING CONFIRMS QUEENSLAND COAL DEPOSIT


Cougar Energy Limited (ASX: CXY) today announced that its recently completed drilling
program had identified sufficient coal to support an underground coal gasification project
incorporating a 40 megawatt power station near Kingaroy in Queensland.

The company said the results of the drilling program – on Queensland coal lease EPC
882 in which Cougar has a farm-in agreement with Metallica Minerals Limited (ASX:
MLM) – had encouraged the company to commence conceptual project planning and
discussions with Queensland Government authorities.

Underground coal gasification (UCG) involves the in-situ conversion of coal into a gas,
which can be brought to the surface through drilled production wells and used as a fuel
for power generation and manufacture of petrochemical products including diesel fuel.
Proponents maintain that UCG is more efficient in utilising the total energy in the coal
seam than coal seam gas extraction, and is cheaper than using above-ground
gasification techniques, requiring no mining operations.

Cougar Executive Director, Dr Len Walker, said the results of the drilling program just
completed represented “a significant advance” in the Company’s UCG development
plans.

“The drilling results confirm an area of at least 2.5 square kilometres exists within EPC
882 containing a coal seam from 11.8 to 14.7 metres thick at a depth of at least 157
metres. This makes it attractive for application of the UCG process”, Dr Walker said
today.


“This area far exceeds the half a square kilometre required to develop a UCG plant
feeding gas to a 40 megawatt (MW) gas turbine for a life of 30 years,” he said.

“The results permit early consideration to be given to a significant expansion of the initia
operation with incremental increases to a 200MW power station and even larger plants
in the longer term”.
“Cougar Energy’s consultant geologists are now in the process of assembling geological
cross-sections of the Goodger Seam across EPC 882, including the area designated for
UCG operations.”

“This work will enable the Company to select the most suitable part of the deposit for a
supplementary drilling program planned for mid-2007, subject to securing contracts with
a suitable drilling rig.”

“Cougar’s program will permit JORC compliant resource estimates to be made and
provide data for design of an initial UCG burn by the Company’s UCG technology
provider (Ergo Exergy Technologies Inc.). Conceptual project planning and preliminary
discussions with relevant Government Departments in relation to project approvals will
commence immediately.”

Background: 3 holes intersecting Goodger coal seam more than 12m thick 2.5 square kilometres on western side of UCG Designated Area with seam more
than 12 metres thick Coal deposit open to the west and north Ample deposit area for initial 40MW UCG power project Government project approval process initiated

Cougar Energy has completed 5 holes in the Designated Area (DA) set aside within EPC
882 for potential application of the UCG process to the Goodger Seam. This seam was
anticipated to be about 12m thick at a depth of more than 150 metres, parameters which
are attractive for the use of the process. The holes were cased to the depth of the
overlying basalt layer, then drilled open hole to full depth. All drillholes were logged by
an experienced coal geologist, and the drilling was supported by geophysical wireline
logging, which provides unambiguous detection of coal strata.

The purpose of the program was to confirm the location, depth and thickness of the
Goodger Seam, to tie the results obtained into data from previous work, and to
investigate the eastern boundary of the coal deposit within the DA. The locations of both
the current 5 holes (5000 series), and previous drill holes is shown on the attached map.

Drillholes 5009 and 5010 were located on an approximate north-south line containing
previous holes 1702R, 1681R, and 488R, which were logged from chip samples only.
These 5 holes cover a length of 2.3 km, with all holes intersecting the top of the Goodger
Seam at depths ranging from 157m to 215m, with seam thicknesses from 11.8m to
14.7m (refer Table 1 below), and only minor shale partings. To the west of this line of
holes, and outside the DA, previous drilling (cored holes 491C and 1248C) also
intersected the Goodger Seam at depths greater than 160m, with thicknesses of 12.0
and 13.6m respectively.

Using an area of influence of 500 metres radius for each drillhole, these results confirm
2
that an area of at least 2.5km
exists within the DA containing a coal seam with a
minimum 11.8m thickness at a depth of at least 157m, with a known extension to the
2
west and open-ended to the north. This area far exceeds the area of about 0.5km

required to develop a UCG plant feeding gas to a 40MW gas turbine for a life of 30
years. The results permit early consideration to be given to a significant later expansion
of the initial operation.

The three remaining holes in the drill program (T5006R, T5007 and T5008) were located
to test the eastern boundary of the Goodger Seam within the DA. Hole T5006R near the
south boundary intersected the seam over a 19.8m interval from 205.7m depth, but with
significant shale partings being present, and a best coal intersection of 3.4 m over a 4.6
m interval. While this interval might be amenable to the UCG process, the reduced coal
proportion of the intersection suggests a limit to the potential workable coal east of this
point. This conclusion was also drawn from results in holes T5007 and T5008, where
only minor thin coal intervals were present.