NEW $7.5 MILLION BOOST FOR COUGAR’S QUEENSLAND ENERGY PROJECTS
Cougar Energy Ltd (ASX Code: CXY) is pleased to announce a further $7.5 million boost for its Queensland Underground Coal Gasification and Power Station projects with the signing of an agreement with Direct Invest Pte Ltd of Singapore to underwrite the Company’s December 2008 options (ASX Code: CXYO). The options are due to be exercised at $0.05 by 31 December 2008, with approximately 150 Million CXYO options outstanding at present. While the current share price indicates that the options will be largely exercised, the underwriting agreement ensures that a further $7.5 million in cash will flow into Cougar to support the initiation and operation of the Underground Coal Gasification (UCG) Pilot Burn as the first stage of the proposed 400MW Kingaroy Power Project. “Cougar Energy sees the execution of this Underwriting Agreement as part of a continuing strengthening of its relationship with Direct Invest,” Cougar’s Managing Director, Dr Len Walker, said today. “The two companies are working together on a long-term financing plan for the Kingaroy project, to ensure that a smooth flow of the project can continue after completion of test work associated with the pilot burn,” Dr Walker said. “Drilling has already commenced at the Kingaroy site to complete outstanding site characterisation work for the pilot burn, to extend the current JORC coal resource of 73m tonnes, and to install the first process wells. “In addition, we have placed our first orders for the pilot gas clean-up plant, with further orders to be placed in the coming weeks. Verification of delivery times for this plant will enable a more precise estimation of the date early in 2009 which will see ignition of the pilot burn. “It is currently planned to operate the pilot burn until at least the end of 2009, during which time detailed design of the first 200MW stage of the project can be refined with respect to both gas production and gas clean-up, to ensure the most efficient operation of the power block. “A number of studies are currently in progress as part of the preliminary design process for the commercial plant. “Cougar Energy is most enthusiastic about the rapid development that will occur at the Kingaroy site over the next six months, and which will underpin the commercial development of an internationally significant project using UCG technology.” Underwriting Agreement Under the underwriting arrangement, Direct Invest will subscribe for the number of shares in Cougar Energy equal to the number of CXYO options which are not exercised prior to 5.00pm on 31 December 2008 (Underwritten Shares). The Underwritten Shares will rank equally with Cougar Energy's existing fully paid ordinary shares and will be issued at a price of $0.05 per Underwritten Share. Page 2 of 2 COUGAR ENERGY Direct Invest will be paid a fee of $50,000 upon execution of the Underwriting Agreement plus an amount equal to 5% of the value of the Underwritten Shares. Any shortfall up to $1 million (20,000,000 Underwritten Shares) must be met by 13 January 2009, while any further shortfall is to be met progressively to ensure that the Company’s working capital remains above $5 million, but by no later than 31 March 2009. The remaining provisions of the Underwriting Agreement (including the termination provisions) have been drafted on terms that would be considered standard in agreements of this nature. The Underwriting Agreement is conditional upon Cougar Energy's shareholders approving both the issue of the Underwritten Shares and the grant and conversion of the options described in the Memorandum of Understanding entered into between Cougar Energy and Direct Invest that was announced on 10 June 2008. Shareholder approval must be obtained by no later than 30 November 2008 and it is proposed that all necessary regulatory approvals will be sought at Cougar Energy's Annual General Meeting currently scheduled for mid November. Media contact: Dr Len Walker John Field Managing Director, Cougar Energy Field Public Relations Tel: 03 9909 7200 Tel: (08) 8234 9555
CXY Price at posting:
13.0¢ Sentiment: None Disclosure: Not Held
