elephant in the room

Day traders who got trounced and exited positions at a loss in the recent frenzied trading obviously didn't see the elephant in the room - the Mumbai-based oil, gas and power multinational, Essar.

Why would a $20B Indian energy giant sign a lucrative deal with an Australian minnow UCG company?

"Together with our Oklahama project with US energy giant, AES Corporation, announced in December 2010, this agreement with Essar is yet more proof that major international energy companies understand we are at the leading edge of global commercial UCG technology and projects," said Harkins.

The deal is sugar coated. The Heads of Agreement makes for riveting reading even though key terms are commercial-in confidence. Particularly interesting is the free carry for 20% equity to a commercial UCG Syngas plant. Funding is the perennial problem for all juniors. Essar will provide the upfront funding for CGV riding in on the financial coat tails of the energy giant.

Chinese interests must be sitting up and taking notice. The commercial blueprint for future Technology Licence Agreements has been promulgated. Essar and AES Corporation have completed due diligence which includes a study of the financial capacity of CGV to fund its operations. Day traders would have done well to read the announcement.