THE COMPANY
COMPANY PROJECTS
Kingaroy, Queensland
Kingaroy has seen significant development and completion of milestones in the last 12 months
Introduction – development accelerates after the granting of Mineral F
The Kingaroy project is located some ten kilometers south of the township of Kingaroy. Cougar Energy completed the acquisition of the outstanding interest in Mineral Development Licence MDL 385 during the reporting year to take 100% control of the tenement. There are no overlaying tenement issues under the Petroleum and Gas Act.
On 27 August 2009 the Queensland Government granted “Mineral f” as an attachment to MDL 385. This enables Cougar Energy to develop the pre-production phase of its project on this lease. Construction of the pre-production plant has commenced on 2 September 2009.
Abundant coal resources
In June 2008 Cougar Energy announced a JORC compliant resource of 73 million tonnes of coal (indicated 28 million and inferred 45 million). The coal is contained in two seams – the Kunioon and Goodger seams.
The depth of the two seams ranges from 130 – 300 metres with thicknesses of 5 – 17 metres and 2-13 metres respectively. Both seams are well suited to the UCG technology.
The current resources support a project life of minimum 30 years, while further drilling will be undertaken in 2009 -10 to the north of the tenement to determine the extensions to the existing identified seams.
Kingaroy Power Project construction commences
This is the flagship development for the Company and represents the first major commercialisation of UCG technology in Australia.
Cougar Energy will construct a 400 MW power station to provide electricity for 400,000 homes for in excess of 30 years. It will be developed in two stages, the first stage designed to 186 MW (gross). The site has reached a number of milestone targets in the reporting period in the last 12 months.
The ignition of the underground gasification process and commencement of UCG gas pre-production for testing and evaluation is scheduled for January 2010. This pre-production plant has been designed as an integral part of the Kingaroy project and is not serving solely as a demonstration plant. The construction of the gas cleaning plant (as seen at the front of the schematic appearing below) is an Australian first for UCG power project development.
Key milestones targeted for 2009 -2010
+ award construction contract and commence building works
+ connect power to site
+ ignition of the UCG process
+ testing and evaluation of gas production and plant performance
+ bank feasibility study (leading into funding of the project)
Wandoan, Queensland
Cougar Energy’s tenement interests in Queensland’s Surat Basin represent the next major development step in the Company’s growth profile
Cougar Energy maintains interests in a number of leases in the coal resource rich Surat Basin in Queensland:
+ in its own name, EPC 1118 near Wandoan , and+ in association with Cockatoo Coal Limited (Cougar Energy has the rights to coal resources at depths below 150 metres.)
Cougar Energy’s immediate focus is on EPC 1118 and the adjacent lease EPC 1134 (where Cockatoo Coal announced encouraging drilling results on 20 July 2009). The Company announced a new JORC Compliant resource on EPC 1118 on 18 August 2009:
341 million tonnes (34 million indicated and 307 million inferred).
This resource exceeded the Company’s expectations and now further confirms the reliable continuation of the Macalister Seam occurring in the Walloon Coal Measures upon which EPC 1118 is situated. The size of the resource allows Cougar Energy enhanced flexibility in planning commercial development in the area, including replicating the Kingaroy development.
+ develop feasibility study for site development
+ expansion of the JORC resource
South Gippsland, Victoria
Cougar Energy’s interests in Victoria have the potential for large scale low emissions projects utilising brown coal
In September 2007, Cougar Energy entered into a Memorandum of Understanding (MOU) with Ignite Energy Resources Ltd (formerly Victoria Coal Resources Pty Ltd) in relation to the potential for applying UCG technology to the brown coal deposits known to exist within its Exploration Licence (EL) 4416. The Company has reviewed the data on the licence and identified areas (Designated Areas) where coal seams have the potential for exploitation using UCG technology.
These areas all contain the Traralgon coal seam, which is believed to exist at depths between 150m and 400m, with a thickness of at least 20m.
While it would be unrealistic to expect all of the coal within the Designated Areas to be amenable to the UCG process, the size of the areas, the vast coal resource contained within them, and the evidence from existing drill data, all suggest that there will be an ample coal resource to meet the requirements of a very large, long-term UCG project. Even if only 10% of the Designated Areas proves to be suitable for the UCG process, the coal mineralization exploration target base for a drilling program would be of the order of 800 – 1,200 million tonnes * with potential gas production energy content of about 10,000 PJ, or sufficient energy to supply a 1000 MW power station for 200 years.
Cougar Energy believes that success with the technology will provide Victoria with a very large supply of low cost gas with a wide range of end uses, and with the capability of making significant reductions in the high carbon dioxide emissions applicable to the State’s current brown coal-fired power generators.
Key milestones targeted for 2009 -2010
+ sign joint venture with Ignite Energy Resources
+ commence drilling program at target sites
*the exploration target is based on estimates of previous drilling programs-these estimates cannot be classified as mineral resources or ore reserves: the potential quality and grade is conceptual in nature and there has been insufficient exploration to define a mineral resource- it is uncertain if further exploration will result in the determination of a mineral resource.
Cougar Energy (UK) Limited
High potential prospects continue to be progressed on international sites
Cougar Energy (UK) Limited (CUK) is 47.8% owned by Cougar Energy Limited.
CUK applied for a lease in the extensive Thar Coal Field in the east of Sindh Province and in November 2007 was notified of an Offer of Grant of an Exploration Licence over 47.3 square kilometres within Block III defined by previous drilling. The company expects the Grant of Offer to be made to CUK in 3Q 2009.
The Geological Survey of Pakistan has drilled 27 holes in this area at approximately one kilometre spacing, which were cored and geophysically logged across the zone containing the coal seams. Within this area the coal seams vary from 8 metres to 23 metres thick, at depths varying from 115 metres to 205 metres, and hence contain a very large resource to which UCG technology may apply.
Pakistan has a great need to increase its generating output to meet escalating demand. At present load shedding is necessary to match demand and supply, with supply to homes in Karachi being cut for more than six hours per day. As a result of the shortage of supply, prices received by power generators in Pakistan are more than double average Australian prices.
There is clearly significant political uncertainty which may affect the financing of infrastructure development in Pakistan. CUK is already taking steps to ensure that its developmental and financial exposure will be minimized in the event that the relevant licence is granted.
In March 2008, CUK signed a Memorandum of Understanding with Essar Exploration and Production Limited (EEPL). EEPL is a member of the Essar Group of Companies, one of India’s largest companies with interests in India and overseas in steel, shipping, power, oil and gas, telecom and construction businesses.
The MOU specifically provided for both companies to jointly evaluate and develop UCG projects within coal concessions held by a number of Public Sector Undertakings in India and with other companies within and outside India as may be mutually agreed.
It is well understood that India has vast unused coal resources, much of which may be amenable to application of the UCG process, and the country also suffers from a shortage of power nationally. As a result of this view, CUK is also discussing potential application of the technology with a number of other Indian companies.