Cougar Energy Ltd
(ASX:CXY) says it is in discussions about forming an alliance to develop underground coal gasification projects.
In a statement to the ASX the company says its board is considering a proposal to form a strategic alliance with an investor group for the development of UCG projects.
Cougar says its board has given approval to senior management to continue negotiations with the investor group regarding the proposal.
The company has had a bumpy ride lately after claims it contaminated water at its trial UCG project near Kingaroy in QLD, forcing Cougar to place its shares in a trading halt so that further testing could be done.
Tests cleared Cougar of contaminating groundwater, however the project remains on halt.
The incident prompted Cougar to write a letter to all Queensland State Members of Parliament about the benefits of underground coal gasification and confirm its commitment to the project.
The company says it will advise the market in the event that an agreement is finalised by the parties.
Cougar posted a $4.15 million loss for the 2010 fiscal year.
