China Connection

The company has the support of the cornerstone investor Kam Lung Investment Development Company Limited, I just wonder if by spending another ~$10m our new Director Mr Huihai Zhuang might choose to increase his holdings from 19.87% to approximately 42.95% of the company. IMO When you look at the numbers, the technology on offer, developments in the renewable energy space, and the structure of the new JV then it doesn't take much to joint the dots and come to this conclusion.

I just wonder if Mr Huihai Zhuang, as a Director of the company (or any other director for that matter) might have an obligation (moral?) to disclose his intentions prior to 31 July 2016? Esp. since the company has obviously commissioned the recent analyst report by APP Securities with a sp valuation of $0.23 and price target of $0.14!

APP Securities also has it's own Chinese connections. Coincidence?

http://www.carbonenergy.com.au/IRM/PDF/2228/CNXSecuresFundingJVPartnerforChinaGasBusiness

Mr Huihai Zhuang
Private Placement: Kam Lung Investment Development Company Limited
Kam Lung has agreed to subscribe for an additional 123,845,128 shares in Carbon Energy at a price of $0.016 cents per share representing a 14% premium to the closing price as at 25 September 2015 (“Placement”). The total value of the Placement is $2 million. Shares to Kam Lung will be allotted on receipt of cleared funds which are required on or before 30 September 2015.

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Currently there are CNX Shares on Issue 1,487,938,870 of which
Kam Lung Investment Development Company Limited holds:
171,818,615 ordinary fully paid shares +
123,845,128 ordinary fully paid shares. Shares are held in escrow until 7 October 2016 and will not be sold, transferred or otherwise disposed or dealt during before this date without the prior written consent of the Company
Total = 295,663,743 (19.87%)

CNX Listed Options on Issue 443,696,404
Kam Lung Investment Development Company Limited holds:
171,818,615 listed options (38.72%)
(Exercisable at $0.06 expiring 31 July 2016 for a total of $10,309,117)

Now if our new Company Director did exercise all his options at $0.06 ~a 375% premium to Friday’s close, but a 43% discount to the recent analyst target (without any other options being exercised on 31 July 2016) then he would hold a total of 467,482,358 CNX shares or approx. 42.95% of the company without triggering the need for a takeover offer.

From the recent Analyst Report:
CNX’s UCG model is strategically well positioned to take advantage of the Chinese Government’s push for increased penetration of natural gas within the Chinese energy mix. It has the following features:

• Relatively short lead time and competitive capex;
• Relatively low opex through to SNG (@ $A3.50-4.00/GJ);
• Continuity of production and consistent flow rates;
• Reduced geological complexity v other unconventional gas sources (limited water table impact, use of insitu water etc.);
• Flexibility of project development – with a range of potential end products depending on input gases, UCG has a versatile production mix which can be tailored to client specifications; and
• Potential to monetise and access extensive available “uneconomic” coal deposits

IMO all speculation, but all good for holders - I hope. Also with plenty of scope for other positive/negative news as well.