This is Mr Lincoln Augustus, first second cousin of HolymagimanI...

This is Mr Lincoln Augustus, first second cousin of Holymagiman

I have to re-enter this debate with some clarification. Now I see what has happened and I think I was a bit too quick in criticising the Board. What has happened is this:

1. Dr Len Walker has obtained long-term financing of $280 million for Cougar. In the present economic climate, I think that that is a very clever thing that he has done and something that a lot of other companies will find impossible to do. So well done to him.

2. Finance is in two tranches, the first in end of 2008 ($30,000,000) and the second at end of 2009 ($250,000,000).

3. For this, DI get a 2% success fee of $600,000 at end of 20008 and $5,000,000 at end of 2009. 2% is not much more than a real estate agent will want for selling your house (and you do not have to pay for the advertising camppaign.)

4. 3 tranches of options are to be given to DI, totaling 80 million options exercisable at 25 cents by 30 June 2011, subject to shareholder approval. So DI will have all the more reason to have done due diligence studies on CXYs plan as they not only have their $280,000,000 at stake, but they also have profits foregone if CXY does not perform. I can live with that.

5. DI participated in CXY's recent $7m equity placement. That is very good, as I sincerely believe that DI will not be selling any portion of their placement. They are in effect a PARTNER in this venture, and anyone who enters a partnership and sells out early for miserable profits has a hole in the head. People with holes in the head do not have access to $280,000,000. I somehow do not think that DI is in the same class as some of the day traders who inhabit the nooks and crannies in Hotcopper.

6. Len walker states that the signing of the MOU with DI marked the achievement of ONE of Cougar Energy's goals over the past 12 months- cementing a relationship with an experienced financial partner WITH THE DESIRE to see the Company's project plans develop through the Pilot Burn phase to COMMERCIALISATION. That says a lot for me.

7. That raises the question - has Cougar any other goals that we are not aware of??

8. Now we come to the really interesting bit. You will all see that the initial $30,000,000 is being given at the END of 2008. so what is Cougar going to do till then...twiddle its thumbs and count its toes or what??? Here is where I take back my criticism of the Cougar Board, because of what is written in the second last paragraph of the report. I am surprised that no one else has brought this up, so I will.

The report states:

“The Company is now placing orders for the plant required for the Pilot Burn and associated pilot gas clean-up equipment, and is also planning a new drilling campaign to extend the JORC resource base. The funding for this work comes from the recent capital raising and the progressive exercise of the December 2008 options.
“Project planning and financial evaluation for the first stage of the Power Project will also be accelerated in anticipation of the finalisation of the agreed project financing plan.”

So that was what the $7m was for ...to kick start everything and to prove up JORC before the AGM. That sounds excellent to me.

9. Today, about 30 million shares changed hands. I would be surprised if DI had been doing any selling. Perhaps the news was not as good as some would have expected, who knows.

But to me, it explains the placement PRIOR to financing, and the financing by DI shows confidence in Cougar.


I remain
Yours sincerely etc., etc.,
MLA