Cougar Energy is considering a potential divestment of
non-strategic tenements in Australia to focus on its underground coal
gasification strategy in Asia.

The company is continuing negotiations with local partners in China, Mongolia
and Indonesia to gain access to coal leases identified to have UCG development
potential.

In Indonesia, Cougar and its partner PT Medco Energi Mining Internasional are
now focused on three prospective project areas, two in Kalimantan and one in
Sumatra.

This will focus on UCG to power generation projects with initial capacity of
about 30 megawatts that can be scaled up at a later date.

In China, Cougar is in the process of selecting a site to start a pilot
underground coal gasification (UCG) burn on a coal deposit within the Wu Ni Te
coal basin.

Preparatory technical design, equipment specifications and the identification
of local support services are being carried out to minimise mobilisation delay
once permits have been issued.

Cougar is also continuing discussions with the Mongolian government into the
use of UCG to develop local coal resources .

Meanwhile, the company’s Wandoan MDLA 420 in Queensland has been cleared to be
registered as a Mineral Development Licence.

The licence as Indicated and Inferred resource of 341 million tonnes of coal.