Under the MoU, DI will arrange two tranches of funding, the first of around $30 million at the end of 2008 and the second of around $250 million at the end of 2009, subject to achievement of agreed project milestones.

DI is a subsidiary of German financial services institution, Direct Invest AG Group.

"The international range and strength of the Direct Invest Group's interests provides our management with the confidence to accelerate the initiation of the Pilot Burn and the various approvals required for the Power Project development," Cougar managing director Len Walker said.

"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.

"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."

The funds to be raised by DI will be applied to bankable feasibility, design and construction of the first stage of Cougar's UCG project, which is part of the phased development of a 400MW power station using UCG gas.

DI will receive a success fee consisting of 2% of the funds raised and a staged incentive of up to 80 million share options exercisable up to June 30, 2011, at 25c, convertible on completion of each stage of the funding.