sunday reflections

Having had a stressful Sunday reflecting on how going to cope moving forward, I thought some views I have reached might help others. Apologies if they don't.

UCG: UCG is undoubtedly a proven and efficient technology. I do not believe it is the answer to all the worlds evils, but it is a very useful stop gap (30 years or so) until other technologies and renewables come on the scene. This was true in 2005 when Pinnacle (as it was) bought Len's company, and its still true today. Nothing that these so called independent panel spoecialists have written froma technical point of view changes that.

UCG vs CSG et al: UCG is still a far better technology against all currently alternatives. Indeed, and as fellow posters have pointed out on numerous occasions, UCG has several very significant advantages over them.

Facts: Being Factfinder I truely understand how anyone who doesn't adopt a factual approach to the Kingaroy Pilot is rather mis-guided. But the fact is (and I am not a great supporter of taking Governments to Court) Kingaroy is now "in its final phase" as the ISP report so simply puts it. However what we can take from it is significant. Len successfuly lit another UCG project, it burnt well for a while until the casing issue (which is understood and unlikley to occur again). Fact is, the project worked. Clearly not for long enough, and not to pass into commercial production. In fact in the current position it is no better and no worse than LNC's project.

Truth: Most posters and investors in CXY will feel utterly let down by the QLD Government. So they should. We shouldn't forget however that there are things however that CXY might have done differently with the advantage of hindsight.

Back to the QLD Government. The two things that stands out for me in the ISP Report are the constant comments about "lack of base line data" and "socio-political" factors.

The lack of base line data is frankly the QLD Governemtns fault. It allowed the UCG industry to start before it worked out the difference between which Regulator and which Government department would control it. We thus had numerous overlapping Petroleum and Mining licences allowed to co-exist. In short the Governments confusion allowed this situation to develop. Neither Department was managing this industry properly. Neither Department understood what was happening on their door step. Thats not CXY's fault.

The other comment about "socio-political" factors has absolutely no place in a scientific paper of any kind. Scientists are hardly the right people to make political judgements. But clearly politicians can get scientists to back their opinions. I know that happens, and having worked at high level in Victoria, NSW (inside Government) and Queensland and WA (outside Government), it is well known that if you need a particular line being taken, you simply set out with a tight brief and select the "right" experts.

This last reference to socio-political factors is a lightly disguised comment that goes to the heart of the matter. In a properly regulated start up phase of ANY industry, base lines and key performance factors are well understood and specified. It didn't happen here, so when CXY had its "laboratory error" it opened up the possibility that "change" (frankly retro-spective change" could be enforced. The politicians totally mis-read the strengthg of opposition on this site. Maybe CXY did the same, even though it did the correct thing by having liaison meetings etc.

The Future: So where from now. Frankly I don't envy the current Directors. The technology is so promising but Kingaroy is dead. I do appreciate that this might sound daft, but the other QLD site (at Wandoan) might offer a way forward. Clearly the cost of start up etc will be higher, because Regulators will now specify tighter controls, but at least that would be known from outset. As a risk management exercise, whislt Kingaroy has gone, risk is much lower. However political risk remains, and for that reason I sense that QLD should be dropped, and Victoria and maybe South Australia targetted. But the overseas dimension is where I would focus, but it needs to be handled carefully as the sheer amount of Press will create a Company with a tainted name. A change of Company name is easy, but getting others to adopt UCG will now take a little longer as theya re taken through the factual evidence rather than the "socio-political" factors that have caused the Honourable (hardly) Kate Jones to win the day.

Next Week: No doubt if CXY doesn't stay in Halt there will be considerable action. Some will bail. Some will stay. I for the record am staying. My millions of shares will stay through this period, full stop. I believe there is now a Quarterly Reporting need, there's the Kingaroy Response and the Chinese will no doubt need massaging across the line to continue their investment activity. The facts say there is no reason for leaving, but business is business.

No doubt the SP will plummet, but there is a floor under which the SP will look extremely good. Lets hope the buyers set that at a price that the Company can afford. Good luck guys and gals.