CCC - Continental Coal

[bocky]

CCC is in suspension at present. They are about to surpass 2 major hurdles that any small mining company will need before they can get bigger
1- Debt finance- you have to grow your company somehow, debt is better for existing shareholders when compared to new share issues
2-Off-take: all their coal is "pre-bought" meaning that they have secured revenues for future production.

I understand that there is a long way up for this company with the above situation, I am comfortable with a target of $0.12 (currently 5cents) with upside down the track

I also understand the corporate appeal for thermal coal is really heating up considering
-USA has new environmental hurdles limiting coal power generation from USA. Bad for USA thermal coal producers. Good for non-USA coal producers (CCC is African)
-Oil prices trending steadily higher

Any thoughts?

 

[Skip1jz]

Suspension has been dragged out as another two parties have come forward to offer "superior" off-take and funding package than that offered by EDF S.A, which bought about the suspension.

Bocky, from what I understand at the present there will be no dilution with this funding package proposed by EDF, it is purely a loan paid back with X% interest?

Would be interesting to know the current SP if the stock had not gone into suspension.

I hold.

 

[Boyou]

Trading again today. The news looks good ,although,being treated poorly by the market so far....Perhaps the general pullback has something to do with it?

From the Company announcement.

FURTHER OFFTAKE WITH EDF TRADING AND ADDITIONAL US$27m FINANCING FACILITY
Key Points:
•
Second off-take agreement to be entered into with EDF Trading, a leader in the international wholesale energy markets and a wholly-owned subsidiary of EDF S.A., the world’s largest energy utility;
•
Option granted for EDF Trading to provide up to an additional US$20M of funding for the Vlakplaats Coal Mine which will be repaid from coal production;
•
Additional US$27M (ZAR200M) funding agreement entered into with South African investment consortium;
•
Funding package and off-take agreement with EDF Trading is in addition to the US$20M funding and off-take arrangements previously announced on 30 March 2010;
•
Completion of off-take discussions and funding arrangements now allows Continental to complete acquisition and aggressively fund development of its portfolio of coal mines into production over the next 12 months; and
•
First Continental coal mine, Vlarkvarkfontein, to commence first coal sales in May 2010.

 

[Skip1jz]

Yes I think the market reaction to this deal would have been far more postive, I guess when the XAO is down around 1.5% the speculators aren't going to be rushing in. Will continue to hold and hope for some positive sentiment.

 

[drillinto]

April 21, 2010

Continental Coal Is Building Up A Nice Head Of Steam In South Africa, As It Powers On Towards A Production Goal Of Nine Million Tonnes Per Year
By Charles Wyatt
www.minesite.com/aus.html [Free registration]

This year looks like being pretty exciting for Australian-listed Continental Coal, which has its assets in South Africa. It helps, of course, that coal is flavour of the month, but you can have huge amounts of coal but will make no money out of it unless off-take agreements are in place and unless transportation is no great problem. In the case of ContiCoal, as it’s called, it started mining activities at its Vlakvarkfontein mine a few weeks ago, blasting is now underway, and it expects to achieve first coal sales in May. The company has secured up to 300,000tonnes per month of rail allocation for its planned exports of thermal coal. This allocation matches the company’s forecast annual steady state production of export thermal coal from its Vlakvarkfontein, Vaalbank and Project X coal mines in the coming 18 to 24 months. So that is transportation sorted. Meanwhile, Andrew Macaulay and Bruce Buthelezi, chairman and managing director of the company, have combined with director Pete Landau to pull off a blinder as far as off-take is concerned.

As Bruce admits, the deal was a long time in the making, but EDF Energy, Europe’s leading electricity producer, agreed at the end of March to provide a US$20 million financing package for the development of these same mines in return for securing all production of thermal coal for export. The funds will be repaid over five years from the sale of the coal, with the price based on market AP14 benchmark FOB Richards Bay for an initial period of 20 years. Vaalbank and Project X mines are expected to start production at a combined rate of 2.4 million tonnes per year in 2011, so that fits together very nicely and it is all being tied up on a big red bow with ContiCoal issuing 40 million options to EDF at A$0.05 each and another 40 million at A$0.10 cents each. The present share price is A$0.057, so EDF will not be exercising the options yet awhile, but when it does ContiCoal’s finances will benefit accordingly.

As a result of this initial deal the company can complete on the acquisitions of its assets and get on with development. Only three weeks on, however, and it has agreed a similar deal for its Vlakplaats coal mine – same amount and repayable out of coal sales. In no seconds flat Continental Coal has transformed itself from an also-ran into a leading South African junior coal company with first production only a month away. This has not yet been fully recognised in the share price, which has risen only modestly from the A$0.048 cents price they were trading at when the company requested suspension prior to these announcements. Maybe the current noise around coal is so loud that ContiCoal is struggling to make itself heard, or maybe Australian investors are worried about South African politics, or both.

What they may have missed too is the additional US$27 million funding that has been agreed with a South African resource-focussed investment consortium. This is being delivered by way of a five year debt facility at 10 per cent interest, and will be used to pay off amounts outstanding under the company’s existing debt facility as well as to provide a top -up as required for completing acquisitions and for developing Vlakplaats. There is a fair degree of flexibility over repayments, as they can either be repaid out of cash flow over the five year period, or fully on maturity, or converted into equity on a basis which will have to be negotiated in advance. There is an indication here that the anonymous resource focused investment consortium could be part of a BEE plan, but a word with Bruce Buthelezi shows that this is not the case. ContiCoal’s BEE partner, with a 26 per cent stake, is Masawu Investments. Bruce points out that Masawu is effectively him and some friends.

All the four coal mines involved in these off-take and financing deals are located in South Africa’s Central Basin, to the east of Johannesburg. This coal mining region accounts for 75 per cent of the country’s total coal resources, and 80 per cent of production. Vlakvarkfontein, Vlakplaats, Vaalbank and Project X lie within 70 kilometres of each other in the Witbank coalfield, where there are 60 opencast and underground collieries in operation. All of which means infrastructure is not a problem. Vlakvarkfontein, in which ContiCoal has a 60 per cent interest, is at the eastern edge of the coalfield and lies less than five kilometres from the Richards Bay rail line and 13 kilometres from Eskom’s Kendal Power Station.

Vaalbank will be an underground bord and pillar single seam mining operation focussing on the # 4 Seam which averages 2.44 metres in thickness. Its neighbour, the Dorstfontein Colliery, is currently developing 40 million tonnes of resources along this same seam. ContiCoal is working on 75 million tonnes of resources which should give it a 30 year mine life and, like Vlakvarkfontein, it is double washing coal to product export thermal coal and domestic coal. The difference between the two mines is that the domestic coal is expected to sell at a slightly better price, which will push average revenue up to Rand 460 per tonne, compared with costs of Rand 341 per tonne. Vaalbank is only 10 kilometres south of Project X, which is right next door to the Richards Bay rail line and the Komati Power Station. Project X will also be an underground operation, similar to Vaalbank, focussed on the same two products and mining #2 Seam as well as #4 over a 20 year life. It is likely to come into production by the end of this year, several months earlier than Vaalbank.

There are more mines in the offing, but the last of the four which have funding and off-takes in place is Vlakplaats, a project which is surrounded by others producing 7.4 million tonnes per year, mostly for the export market. Vlakplaats is going to be a combined open pit and underground mining operation exploiting the same two seams as Vaalbank and Project X will exploit, but the difference is that Vlakplaats has resources of 122 million tonnes, which should keep it going for 50 years. It will produce mostly export A-grade thermal coal, meaning that this mine will probably be the star of the ContiCoal show when production starts at the end of 2011. By that time ContiCoal will be well on the way to its long-term production target of nine million tonnes per year.

This is a company with a good story to tell, with an excellent portfolio of coal assets and an ambitious production profile in one of the world’s largest coal mining regions, where all the infrastructure is close to hand. It could not have a better BEE partner than its own founder and managing director, and he will be instrumental in further strategic acquisitions. The company now has to spread the story further afield and generate more attention from investors, lest a competitor make an opportunistic bid. Maybe a presentation at one of our Forums would get things moving, as the bullish case for thermal coal exported to China and India remains strong.

 

[Boyou]

Thanks for the detail ,drillinto.

Good to have some flesh to put on the bones of the company announcement.SP has not reflected what I (and many others) expected. Ho hum ..the market is a contrary beast.

It has been suggested on another forum ,that some investors are averse to South Africa's political climate and not too impressed by their inability to keep to schedules/ targets.

Food for thought.

 

[Boyou]

In Suspension again..

Pending anouncement of (among other things) the appointment of a CEO .I have heard rumours of who it is,but won't post anything but the facts.

If the rumour is true ..it might give these the nudge they seem to be needing.We will know tomorrow...

Good luck to all holders

 

[Boyou]

A Milestone for CCC..

In Continental Coal's (ASX: CCC) transformation into a mid-tier coal producer, the first coal production blast occurred at 1.00pm (SA time) on Thursday 27 May 2010.

An initial parcel of raw coal will now be loaded and transported to local coal wash plants in the Witbank coal field to be washed and analysed.


Full story here:-

http://www.proactiveinvestors.com.a...-south-africas-newest-coal-producer-7522.html

 

[Boyou]

Conti Coal continues to release good news.Great to see they are keeping us well informed of developments.

ASX announcement re the Vlarvarkfontein mine. Also mentions the probable sale of their Vanmag Iron Ore lease..giving them $10,000,000 to advance other coal projects in the pipeline.

They are well on their way to becoming a mid tier producer..BUT ..still the SP languishes.........

Read all about it.

http://www.aspectfinancial.com.au/d...2VzaWduYWwvZXJyb3JwYWdlcy9wZGZkZWxheWVkLmpzcA

 

[Boyou]

Conti coal have taken a turn for the better,pleased to say

A reccomendation in Diggers and Drillers and the impending sign off on funding from EDF has brought some much overdue attention

Over 306 million traded today.

Hoot..hoot.

 

[expertspiker]

when will they finalise the EDF deal? since april they have been saying it's coming soon but nothing has happened yet. could this be a worrying sign, or just taking longer than expected?

 

[Boyou]

I wish i could give you a definitive answer on the EDF thing
However, I see a general upward trend in respect to Conti Coal meeting "expectations"
Coal is being stockpiled and port/,rail access in place for initial shipments..CEO Don Turvey was specifically chosen for his South African connections and his prior experience with BHP

Just be patient

 

[ixalus]

What do you guys think the chances are that this deal will fall through? I'm not sure CCC will be sustainable at the level it's at if the deal were to fall through.

 

[Boyou]

As I seem to be the only regular poster on this thread,it falls to me to answer.
But first tell me if you have done any research into their history and targets..or are you just jumping on the next big thing?

Sorry to be harsh ,but self help is the best help of all.

I am a holder of these shares..

 

[ixalus]

I'll be honest, CCC was a recommended buy by a close mate. Been watching this stock for the past 4-6 months. I'm just a casual trader and do not perform any in-depth analysis on company data. The main things I look at is the financial health of the company. Are they to too highly geared? Their capital/cash reserves. The net profit etc... basic fundamentals of the company. My thought is, looking at the details already released, CCC has potential to grow as a company. But I'm in unfamiliar territories as I normally invest in blue chip shares for the long term. Only seeking some expert advice and knowledge.

 

[MR CUBE]

Looks as though holders are about to be rewarded an absolute hive of activity in recent days and now the expected trading halt.

 

[Boyou]

My thought is, looking at the details already released, CCC has potential to grow as a company. But I'm in unfamiliar territories as I normally invest in blue chip shares for the long term. Only seeking some expert advice and knowledge.

Looks like the EDF thing is happening Trading halt will hopefully be short and sweet.

This is where the blue chips all started.

 

[MR CUBE]

Turvey is a great appointment.

Watch for him to bring another asset into the business sooner than later.

 

[blackjack]

Shares: CCC.AX has 1,140,000,000.00 shares of stock outstanding.

thats a lot

but getting in on the bottom floor might be rewarded

 

[Boyou]

Very pleased to see Conti start to move strongly north

Diggers and Drillers rate the SP at 11.8 c.Finished the day at 6.8

Volumes are high and buyers are outnumbering sellers.

Bonne chance to all holders