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Thread: GUJ - Gujarat

  1. #1

    Default GUJ - Gujarat

    Anyone on this forum following this one? A relatively new listing... It's parent company is floating another very similar spinoff on july 4: India NRE Minerals IPO... Which is apparently oversubscribed... expect flaot price of 50c...

    I'm busily reading as much about it as I can... a couple of posts copied from the 'other board'

    from Tibbs
    With TWO operating coal mines by the end of the year, the potential for GUJ is massive!!

    As an example. check out RIV .... I bought this for just over $1 & made 100% selling at $2 . now look at it, with a MC of nearly $500m.

    Just some history on RIV ... they where basically a shell that refloated at 20 cents & purchased the Zululand Coal project off BHP ... BHP had mined the reserves & it no longer fit their profile ... 12 months AFTER the purchase RIV was able to confirm a coal resource of only 20mt. RIV also then got involved in a large exploration coal play in Mozambique, where they have now confirmed 62mt coal deposit & drilling will increase that.

    Compare that to GUJ ... amazingly similar in many ways ... purchases an old BHP coal project, with 26mt ready to mine. PLUS they have they Avondale project with 200mt (Never mind all their other metal projects) .... All this and a MC of only about $145m fully diluted.

    RIV will keep going upwards too. But just based on the comparison, where will GUJ get to?? Short term $1 is a given. It will come on the radar of Instos & when it gets into the All Ords will go further

    No ramp ... just dead easy money
    from sp3

    GUJ is projecting to earn about $300M per year from the 2 mines by 2009 for the next 20 years or so.

    With a market cap of half of that, it is definitely UNDERVALUED based on their future earnings potential.

    Producing mining companies have a PE ratio of around 15.

    As you can see GUJ eventually will be re-rated to correspond with their future earnings and sector PE ratio.

    btw, I havent even taken into account their other assets.

    from Trade4Profit

    "I spent a bit of time today reading back over the ZCO announcements (GUJ's prior life)...I suggest anyone interested in this play do the same!

    Seems many of their metals assets appear relatively advanced...so given the obvious coal/iron focus of the parent company, it would seem obvious that a resources spin off is on the cards near term?

    In fact, this could be a nice way to encourage early options conversion, which would net the company proceeds of some $34m...I will discuss why later.

    Back to the coal...

    It seems standard practice for BHP to off-load projects nearing the end of their lives, before remediation needs to be considered I guess...but to do so while they are still profitable and obviously attractive to someone.

    The benefit for GUJ here goes beyond the usual attraction of a typical BHP disposal however in the obvious synergies for the neighboring Avondale colliery!

    Not only does the Elouera acquisition afford them instant and ongoing production potential, reserves and infrastructure, but it brings forward the Avondale production plans by about 2 years!

    Elouera Colliery was originally established from the consolidation of Wongawilli, Nebo and Kemira Collieries. During full production, annual capacity was listed in the state records as 2mtpa in 2005(2.5mtpa in 1997) and at the recent cessation of the short-term Delta Mining contract, was down to just under 1mtpa, with some 41mt of untapped resources.

    A recent news article quote from Gujarat NRE Coke's chairman Arun Jagatramka in regards to Elouera...

    "With the acquisition the company's production of coal is expected to go up to around two million MTPA from one million MTPA in the short-term.

    He added...

    The acquisition also means that Avondale should be able to come into production much sooner than we had anticipated."

    So it appears they are looking at 1mtpa from Elouera here near term, possibly with upside of 2mtpa - 2.5mtpa, with feed likely from Avondale...with first production due this month if their claims of "production this financial year" are to be upheld!

    It might also be worth mentioning, the parent company is on something of a declared buying spree in Australia for coal projects to bolster supply back home...it is currently spinning off the NRE No.1 Colliery via an IPO on the ASX, with a very similar business model and share structure as GUJ.

    If not for GUJ's Avondale project, I suspect the parent would have bought Elouera for a separate listing, but the obvious synergies made sense to list it via GUJ. The benefit for shareholders here is that the parent will not be able to "value add" as they are with the other coal projects, as such much of the "bonus value" they are extracting from their acquisitions will be equally shared by all GUJ shareholders here.

    It still has to be paid for however (AUD$49m)...so perhaps in the free-float seeding process currently underway, the company is also maintaining a temporary cap on the stock while they quickly arrange a share issue to themselves as repayment for the AUD$49m purchase price?

    Interestingly, this will put them over 90% shareholder threshold...which I suspect they will not want to do? Might be a bit of creative accounting required here?

    Back to the coal resources again...

    Collectively, our new combined project (Avondale-Elouera) sits on some 125mt of proved and probable reserves (27mt-Elouera + 98mt-Avondale), with significant inferred upside and immediate production capacity of 1mtpa from Elouera (future capacity of 2.5mtpa?) and the bringing forward of the Avondale project plans for a 1.5mtpa operation.

    This suggests a total production capacity in just 2-3 years of some 4mtpa, with current capacity of 1mpta.

    This provides a very favorable comparison to several of their peers, namely the recently listed WHC and of course the parent company's current IPO for the NRE No.1 Colliery.

    WHC listed on Friday, so provides a very current comparison...
    Current market cap = $550m
    Reserves = 113mt (proved & probable)
    Resource = 512mt (inferred)
    Current production = 1.5mtpa
    Projected production = 6.9mtps (by 2010)

    The NRE No.1 Colliery IPO...
    Current market cap = $250m (at listing value)
    Reserves = 35mt (proved & probable)
    Resource = 324mt (inferred)
    Current production = 0.5mtpa
    Projected production = 3mtpa (by 2010)

    Current market cap (35.5c) = $135m (fully diluted)
    Reserves = 125mt (proved & probable)
    Resource = 241mt (inferred)
    Current production = 1mtpa
    Projected production = 4mtpa (by 2009?)

    GUJ seems to be a little smaller than WHC, but perhaps not far behind, whilst clearly larger than the new IPO...which should put the GUJ market cap somewhere between $250m - $550m.

    The halfway mark is $400m

    Lets not forget however GUJ also has a fairly decent resources portfolio, including precious and base metals, iron and of course more coal in Tasmania...perhaps worthy of supporting at least $30m of value on their own?

    So...it would seem at a fair assessment that GUJ, once it gets over the current seeding approach, to carry a market cap close to $420m

    Current shares on issue = 380m (fully diluted)

    The above market cap would give us at least $1.10 per share.

    Assuming as a worse case scenario that the parent company issues itself shares to cover the Elouera purchase, say 140m shares @ 35c, we still get a fully diluted share price of some 80c per share.

    Alternatively, if they encourage early options conversion with a subsequent $34m injection of funds, they might only need to issue themselves some 40m shares, which would result in a fully diluted share price of some $1 per share.

    Assuming however they need to add a sweetener to get options converted, say a 1 for 3 free additional option with say a 50c exercise price, then we get a fully diluted share price of some 88c.

    So, from worst case to best case scenario, we get the following potential CURRENT share values as referenced from their peers...


    As I said, the current seeding and potential capping of the stock will last for perhaps another 4.5m shares...after which I expect the above numbers to come into play!

    Of course, the drilling of Cethana, if successful, would be capable of these sorts of numbers on its own...but I guess that's the upside?



    sounds nice to me... but I'm biased coz I bought some oppies Just trying to work out whether to top up some more...

    Last edited by shadders; 26th-June-2007 at 11:51 AM. Reason: missed a bit

  2. #2

    Default Re: GUJ - Gujarat

    Any reasons why the price is currently at .35 cents ?? what are we expecting next week. I hear that July 4th will be a key date for GUJ

  3. #3

    Default Re: GUJ - Gujarat

    I think it's related to an earlier statement that one of their mines would be producing this financial year (or very soon after)... a recent ann. indicated their financial year has been changed to end march next year so the production date everyone was expecting is effectively put off by 9 months...

    I do expect july 4th to be a significant... with a similar profiles of GUJ and the india NRE new float it would be a bit odd for it to list at 50c and GUJ to stay at the 35 level....

  4. #4

    Default Re: GUJ - Gujarat

    Thanks shadders, let's all hope that after july 4th that the stock will go higher than what it is currently which is .325

  5. #5

    Default Re: GUJ - Gujarat

    From the Australian today

    The Indians are coming

    WHEN India NRE Minerals lists on the ASX tomorrow, that will make two listed vehicles controlled by the huge Indian concern Gujarat NRE Coke -- the other being Gujarat NRE Resources, whose directors include former NSW premier Neville Wran, ex-stockbroker Albert Wong and former CEO of the National Companies & Securities Commission Ray Schoer.

    The big question is why the Indians decided to have two listed vehicles in which they own 90 per cent and 85 per cent respectively, and which have coal interests that, together, would have considerable synergy.

    India NRE, whose $15 million IPO closed oversubscribed, went to market with its NRE No1 colliery, formerly the South Bulli colliery, 10km north of Wollongong. The other company in May bought the Elouera coking coal mine from BHP Billiton to add to its mothballed, 200 million tonne Avondale mine southwest of Wollongong. Somewhere down the track it might turn out that the two listed entities here would be better merged -- and there certainly won't be any problems with gaining shareholder approval.

    Nor with infrastructure. While 70 ships can be waiting off Newcastle and others outside Queensland coal ports, the Gujarat mines use Port Kembla. The coal terminal there can handle 18 million tonnes a year but is at present moving just 11 million.

    Pike slashes the ash

    GUJARAT, based in Kolkata (you may know it as Calcutta), also has a stake in New Zealand. The $65 million IPO for Pike River Coal closes tomorrow, so it's getting pretty late to get a cheque there in time.

    The Indian operation has committed to take 400,000 tonnes a year (40 per cent of planned output) from the new mine in New Zealand and will own about 10 per cent of Pike River after the ASX float closes.

    Another Indian coking coal company, Saurashtra Fuels, will buy 150,000 tonnes a year and also retain a 10 per cent stake in the new listed entity. Nippon Steel is another signed-up customer. The big appeal is that the coking coal to come out of the Pike River mine in New Zealand's West Coast has what is claimed to be the lowest ash content in the world -- just 1 per cent.

    Australian coking coals, which are considered low-ash, range around 8 or 9 per cent ash, Indian coals can be up around 20 per cent and Chinese as much as 30 per cent. So, while the mine output is small by our standards, Pike River's coal is eagerly sought after for blending.

  6. #6

    Default Re: GUJ - Gujarat

    Every Time it looks set to move it gets pulled back down to .33 or .32 that's where the support line is. It needs to break .40 for the next leg up.
    Anyway it's Good to see that it's holding up well on a BAD day on the market.

  7. #7

    Default Re: GUJ - Gujarat


    31 Aug 2007 09:56 ! Trading Halt

    AGM is today, also.

    Last price 39c
    Last edited by moneymajix; 31st-August-2007 at 04:44 PM.

  8. #8

    Default Re: GUJ - Gujarat

    Joint Announcement

    India NRE Minerals Ltd proposes to acquire Gujarat NRE Resources NL by way of an off market take over bid with the merged operations creating a major Australian Coal Company.

  9. #9

    Default Re: GUJ - Gujarat

    I am still holding on!!
    Has anybody got any good ideas?
    I hope this chart helps

    Salute and Gods' speed
    Attached Images
    "While we stop and think, we often miss our opportunity." Publilius Syrus, 1st century B.C.
    "I believe the future is only the past again, entered through another gate." Sir Arthur Wing Pinero 1893

  10. #10

    Default Re: GUJ - Gujarat


    can anyone guide me on NRE Minerals. i believe this stock has done exceptionally well in last 6 - 9 months. is there worth in buying some stock now? what is the future outlook?



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