Factfinder and othersNo way am I going to whine and wring my...

Factfinder and others

No way am I going to whine and wring my wrists over capitalisation and how it may all end up ... its clear as last Wednesday morning in dust storm affected Sydney ... its a journey for sure, but have a think of this ...

# Assume 800mill shares after completion of spp and $15mill cash.

# Assume sp 30c towards the end of the pre-production burn ... issue 200mill shares to raise $60mill.

# Assume sp 50c after approval given for Kingaroy 186MW ... issue 300mill shares to raise $150mill
raise say $120mill via debt including vendor finance for leased gas turbines and do a 1 for 4 capital reconstruction of 1.3bill shares to have 325 mill shares valued at a nominal $2/share.

# Start construction of Kingaroy 186MW June 2011 and complete by Dec 2012 having spent all $120mill of the debt facility and and $185mill of the $210mill raised by issuing shares. That gives $40mill from now to say 1st qtr 2013 for all other company expenses to develop other ucg projects.

# Receive $5mill/qtr for balance of 2013 as cash flow from Kingaroy 186MW, rising to $5.5mill/qtr in 2014, $6mill/qtr in 2015, $6.5mill/qtr in 2016 and $7mill/qtr in 2017.

# Raise a further $200mill by 60/40 debt/equity around 2015/16, meaning the issue of 40mill shares at $2 to fund expansion to 400MW to be commissioned and producing a cash flow of $18.5mill/qtr from 1st qtr 2018 increasing to say $20mil/qtr by say 2022.

Over the decade to 2022, Cougar will have earnt about about $500mill from Kingaroy and have a long life asset worth conservatively $600-700mill on replacement cost alone. Shares on issue would be 365mill at a nominal cost base (post consolidation) of $2


It is a slow, but profitable 12 yrs to get to a capitalisation of about $1bill on Kingaroy alone. Bring forward the sale of Kingaroy once approval to expand to 400MW has been received, retaining a long term supply contract for the syngas and by say 2015/16 Cougar could be flush with funds of perhaps $400mill plus the cash flow from the Kingaroy syngas supply contract.



Success at Kingaroy could very well attract power station clients prepared to fund construction of a couple of say 400-800MW projects for which Cougar gets the long term syngas supply contract, whilst preserving its $400mill from the sale of Kingaroy to develop GTL and other petrochemical projects to add further demand for its syngas.

On that basis, the capitalisation could feasibly and realistically be $2-3bill well before 2020 and soon after could be the $4-5bill mentioned by Factfinder if the GTL/petrochemicals side of the business gets legs and/or if more clients are found for more McPower stations.



If you don't think these numbers stack up, have a look at the capitalisation of EWC which as far as I can tell is associated with ownership of a modest sized but expandable gas fired power station in Asia and ownership of a proprietary modular LNG train system ... the main underlying tangible asset is the power station imo and the company has a current capitalisation of $800-900mill.



Now to sleep, perchance to dream lol.

Cheers
Dex