The current approval that CNX is waiting is standard process. It just a variation to the amount of gas they are allowed to generate.
The 'moratorium on new projects' refers to the fact that there are only two approved trials in Qld - LNC and CNX. Both have approval to develop up to 30mw as part of the trial, the outcomes of which are scheduled to be reported on in mid-2012. The ISP (which endorsed LNC and CNX in the recent review) will be reporting to government on the prospects for expansion. CNX has stated that it will not be investing in the 25mw plant until the government makes it's call, but by mid-2012 should have had close to 12months of continuous operation of the 5mw plant, and demonstrated muli-panel operation with the ignition of panel 3 on which to base it's case for expansion.
It's inconcievable that the government will approve any other UCG company - including Cougar - to operate in Queensland (hence the moratorium). It's entirely plausible, however, that provided the pilot progresses as planned that the ISP will support a highly conditional, regulated expansion of LNC and/or CNX operations, in their current locations. Time will tell. CNX already have a project partner, Arcadia, ready to go when and if the approval to expand is granted.
Either way, CNX's resources overseas look to represent better long-term commercial opportunities based on electricity prices. The proposed commercial-scale plant in Chile looks like it will be first cab off the rank.
CNX Price at posting:
23.1¢ Sentiment: Buy Disclosure: Held
