from the recent annual report

For those who missed these gems from the recent annual report>>>

From the Chairman's Report to shareholders:

Despite the current controversy, the Cougar Energy Board of Directors remains steadfast in its belief that the Company�s business of commercialising UCG has a rightful place in meeting Australia�s and the world�s increasing demand for low cost energy. UCG energy production has the least environmental impact on land use of any of the coal utilization methods.

With respect to the Kingaroy project, the Company continues to vigorously contest the actions of DERM, utilising all of its rights available under law. Cougar Energy has not caused any environmental harm to the site nor the properties of surrounding land owners. It has not polluted the environment and it has not contaminated any ground water supplies in the Kingaroy region, nor has it endangered the health of any of the citizens or livestock of Kingaroy.

Despite the above facts, DERM continues to pursue the Company without presenting the technical basis for its actions. Cougar Energy has been forced to apply under Freedom of Information legislation in its efforts to obtain the relevant factual evidence from the Government.

Cougar Energy has invested over $30 million in the Kingaroy site and will strenuously pursue its right to restore value in the Company for all shareholders.

From the MD's Report to shareholders:

In support of the Company�s view on the absence of any detrimental impact on the environment from its activity at Kingaroy, it is worth summarizing the results from monitoring data for benzene, the chemical compound which has received most publicity for its potential effect on humans. DERM has confirmed to the public that there is no environmental harm or threat to the Kingaroy farming community or its water supplies.

Within the pilot plant area, Cougar Energy has now installed 13 monitoring bores in the coal overburden layers (of which 3 have insufficient water for sampling), at distances varying from 25 metres to 250 metres from the active gasification zone. In excess of 300 samples have been taken from the 10 bores and tested for benzene, for which the Limit of Detection (LOD) is 1 ppb (part per billion), the same level as for the Australian Drinking Water Limit (ADWL).

Of the more than 300 results, only two isolated readings from sampling in May 2010 of 2ppb (in one monitoring bore 250 metres from the gasification zone) were reported as exceeding the LOD. No detections of benzene above ADWL have been reported from these bores since June 2010, and none of the bores closer to the gasification zone have provided readings exceeding the LOD and the ADWL.

Much higher benzene levels (up to 100ppb) have been reported by Queensland Coal Seam Gas (CSG) companies as being present in their recovered water. In response to these reports the Queensland Government Mining Minister Stirling Hinchcliffe advised in a Ministerial Media Statement dated 13 April 2011 that :

" � BTEX chemicals are also common components of products such as plastics, petrol and diesel used by industry and farmers alike. Therefore it is impossible to rule out that it could show up in monitoring data. �"

It would be reasonable to have expected a similar reaction to the isolated trace Benzene readings at Kingaroy.

And also from the MD's recent report, there is imo a "quiet broadcast" of intentions:

In addition to The People�s Republic of China, the economies of both Mongolia and Indonesia are highly dependent on coal as their primary source of energy generation. Cougar Energy has selected these countries for attractive opportunities to commercialise UCG technology and to provide a much cleaner and cheaper energy fuel than those fuel sources presently in use.

(omitted paragraph)

With respect to Indonesia, the country�s coal resources are concentrated in Sumatra and Kalimantan, rather than the population centres on the main island of Java. They host a thriving coal production and export industry from open cut mining. Cougar Energy believes there is a significant opportunity to develop deeper coal deposits using UCG technology to produce a syngas fuel for the generation of power from smaller regional plants in an area currently serviced by expensive diesel-fired power plants. A longer-term goal of conversion to synthetic natural gas to supplement existing local gas production is also realistic. Discussions with prospective business partners in Indonesia are currently in progress.

Dex