Long Termers, page-5

Hi MissusB

I am not a holder of CNX but I have been following closely for several years.

The way I see it ..... CNX is a strategic type of investment. Its future is intimately linked to how the World responds to Global warming. Coal always has been the cheapest form of energy. The relative low price of coal has consistently placed companies in the alternative space at a distinct disadvantage.

Just today, World leaders met in the UN and the need to act is clear to most. Coal is going to be one of the chief losers in a 'carbon constrained economy'.

However, for a company like CNX which is capable of utilizing coal to produce 'syngas', [still carbon polluting but substantially less so], it can become the provider of an interim form of energy as the World in general transitions away from its current absolute reliance upon fossil fuels. As the urgency of Global warming gradually sinks in, traditional uses of coal will radically reduce. Thinking strategically, UCG is one of the few ways in which coal can still be utilized in the new energy economy which will, of necessity, come into being.

As 'dicko55' points out in his post, CNX has done multiple dilutive capital raisings over the last few years and the number of shares on issue has expanded quite a lot. However, now that the options are 'in the money' the company can probably avoid that for a while.

The recent rise in the SP, IMO, only reflects how much CNX has been miss-priced on its fundamentals. My guess is the SP will stabilize around the 6 to 8 cent mark for a while. Regulatory approvals should give it another kick along. The real basis for a much higher price will come if they can sign a deal which commercializes their coal asset. That might take a couple of years even in the best case scenario IMO, but once it happens the company will be valued in terms of its cash flow potential.

The recent announcement captured peoples' imagination on the potential of that cash flow. That still has to realized however.

CNX has an existing deal in China which is a very large project. But if you read through the Qrtly reports for the last several months you will see that the customer is being very tardy in paying its bills. If that situation changes then the SP will tick up on that news. Similarly, CNX has a couple of MOU's for decent sized projects ... but no signed deals yet. At the heart of the slow progress is the fact that although UCG can be cost competitive the initial investment for infrastructure is very high [think minimum $500M]. This is one reason why CSG got the jump on UCG .... coal seam gas extraction is an order of magnitude cheaper to do than setting up a UCG venture.

It has been my personal opinion that UCG is definitely going to become an established source of energy and it probably will have a long life span. At the moment CNX is one of the very few credible companies which can supply the know how. I feel it is certain they will prosper. However, there will be competitors. It seems the Chinese are researching it in their universities for example.

Even though the share register has expanded, 70 cents [and more] is quite possible .... but that is a long way off IMO. To get there, the company will need to have a strong income stream and be paying a dividend. In the shorter term, it needs QLD govt approvals and payments from its Chinese customer. [However, the Chinese deal is a company maker in its own right ... just so long as it continues to progress]

Lastly, I would have been speaking as a holder of the stock but sadly I have mangled my money management and my funds are deep underwater elsewhere.