risk management

Any new or potential shareholder in CXY would rightly start thunking about risk management, whether it was low enough to justify a strong share price, or high enough not to invest in the first place. There are many ways in which to assess risk, but the following might help readers.

First Stage: Identify the Hazards/Risks

Government Approvals
Finance
Technology
Market
Management Competence
Construction


Second Stage: Identify Controls/Mitigations

From the bottom,

Construction risk is always there in any large infrastructure project but there are no particular items here that have never been achieved before.

Management Competence. I almost feel embarassed to put this as a risk factor but in the test of completeness this ahs to be mentioned. Not least of which is the reason that whilst Len has expert knowledge of generating UCG outputs, he ahs less knowledge of running a power station. (Not that those skills aren't easily available.).

Market. Who knows, kangaroos might stop jumping, and Australia might become a republic . . . . maybe the price of energy will fall in real terms, maybe the carbon elimination focus will stop . . . . nope in my mind. The amrket for low cost, multiple year available, and "greener" energy will always be there. Economics of UCG suggest that a small UCG plant compares favourably with a large traditional coal plant.

Technology. Not just the UCG technology (as I do not see this as any risk at all bearing in mind who CXY's partners are, but turbine and power generation. With the likely supplier of both being a global leader, this has to be a minimal risk as well.

Finance. AS someone who actually succeeded in raising financnce in the middle of the current world finance meltdown, I can honestly say there is always money available. The principal issue simply becomes the price the "buyer" has to pay. Ina large aprt the best answer to that comes from the strong financial returns CXY's UCG power station provides. With Direct Invest as one of the financing partners, there doesn't appear to be much risk here either.

Government Approval. To me this is the larger and probably less predictable risk that hasn't got a single management solution. However with CXY producing a range of consultative processes, TV commercials, my guess is they also have lobbyists at work as well, it is at least a process to see that it is possible CXY has moved from "herding cats" to "mustering cattle". (I thought the cattle analogy was appropiate considering how much methane they produce.). DONT FORGET, whilst Queensland is the target for the first scheme, ONLY Queensland projects are affected by Queensland Government. Other governments are showing themselves to be driving UCG forward rather than (apparently) holding it back. CXY has LARGER projects outside Queensland than they do inside.


Summary. I've made no attempt to try and list every single detail within each risk category, and I'm sure otehrs will correct, or argue differently, but as someone who owns several million shares in CXY I hope the post explains a little of why my analysis suggests CXY is a significantly under-valued investment.
Sitting very happily watching my investment increase in value.