Cougar Energy Limited announced that it has entered into a strategic arrangement with Limitedless International Holdings Pty Limited, the Australian based 100% owned subsidiary of Shanghai Limitedless Investment Group Co Limited.

The SLI Group is actively involved in a number of investment activities including the mining industry in Western China. It also has investments in coal, gold and base metals projects in that region and offshore interests, predominantly in Australia.

Cougar Energy and LIH have signed a Terms Sheet which contains the following significant provisions:

1. LIH will take up a placement of Cougar Energy shares to the value of AUD 1,000,000 at a price of AUD 0.035 (3.5 cents) per share, the proceeds of which are to be received by Cougar Energy by the end of October 2010

2. Cougar Energy and LIH will negotiate a Definitive Cooperation Agreement with each other by January 31st 2011, which will set out the arrangement to work jointly to develop and operate Underground Coal Gasification projects in the People's Republic of China

3. Upon entering into the Definitive Cooperation Agreement, LIH will take up a further placement of Cougar Energy shares to the value of AUD 1,000,000 at a price of AUD 0.035 cents (3.5 cents) per share

The terms of the Definitive Cooperation Agreement are to be finalized with the intention that Cougar Energy and LIH will establish a joint venture entity to which Cougar Energy will contribute, amongst other things, its operational and technical know how and LIH will contribute seed capital initially expected to be AUD 3,000,000 and access to its Chinese coal leases for review as potential UCG projects.

Dr Len Walker MD of Cougar Energy said that "This is another significant milestone in Cougar Energy's plans to expand its UCG business in the People's Republic of China. Shanghai Limitedless Investment Group Co Limited is a dynamic privately owned group with great enthusiasm for promoting and commercializing UCG in China. We are impressed by its preparedness to back this enthusiasm through investing at the Company level and providing critical seed funding to accelerate project development in China. Later this month I will be traveling to Western China to join SLI in assessing a series of sites for potential UCG projects."