Just thought I would start some discussion on this stock. Looking for some thermal coking coal plays given the continued projections for global steel demand.
PRC - Pike River Coal
Currently developing a hard coking coal deposit on the west coast of the South Island of NZ.
IPO on the ASX about 3 months ago at $1. Current SP @ $0.785.
* 180m shares with cornerstone investors NZOG (62.3m), Suarashtra (17m) and Gujarat (20m). 65m shares in recent IPO. 20m options.
* Mine expected to start producing in April 2008 (delayed from expected March start date as indicated in IPO.
* Mine development budget has a current $11m increase due to 'more expensive fractured rock costs' in constructing 2,300m tunnel to coal seem. Revised mine capex $185m.
* Fully financed up to mine opening via equity and debt facility (Westpac). NZOG has agreed to finance initial mine working capital requirements.
* Premuim hard coking coal with low ash content. Long term conditional sales contracts entered into with keystone investors Gujarat, Suarastra.
* Mine will be of the Brunner Seam - 11.5mt measured, 27.5 mt indicated and 19.5 mt inferred. Mine will be 1 mt per year from FY09 with a cash cost of $77NZD per tonne. Conservative mine estimate is that 17.6 mt will be recoved over the life of the project, giving a mine life of 18 yrs.
* Blue sky upside of deeper Paparoa coal seam can be accessed.
* IPO sales price $96USD per tonne. Recent announcement suggests this price will actually be $115USD per tonne based on current demand.
* Annual EBIT (based on sales 1 MT) = Revenue $115m USD less mine costs $57.75m USD (assuming USD/NZD ER 0.75) = $57.25m.
* Current mkt cap $141.3m.
Worth keeping an eye out with global steel demand set to continue price pressure on coking coal. Minimal risks as far as I can see - main one would be an initial placement to raise working capital requirements before coal sales turn this into a cash cow.
Be interested to hear people thoughts.
Note it is an illiquid stock and longer term investment. Def would not suit day traders.
I do not own any of these as yet. On my watch list.