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CME - Centralian Minerals

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For those interested in gaining bargain basement exposure to the coal sector, cast your eye over CME, earlier in the year they signed an agreement to acquire a 70% interest in a massive coal deposit in South Africa with current coal reserves around 130 million tonnes with exploration potential targeting 1 billion tonnes of export quality coal.

At the time they signed the agreement the coal prices were yet to surge hence they have got themselves a real bargain price of just 20c per tonne of coal.

Judging by the pick up of interest recently I believe some people are in the know about the timing of the announcement of the completion of due dilligence, once they finalise this purchase agreement it will be a huge boost for CME just on a peer group analysis they would be seriously undervalued given their coal reserves.

With already 11 million shares changing hands and a couple of 3 million share parcels bought looks like this one is just begining to run.
 
Great to see CME on the move today, this is just the beginning remember once the South African coal deal is finalised we will see a surge in the share price.

Below is an article from this morning discussing the spot price of coal, in particular check out the cargo from South Africa $115 per tonne compare that to an acquisition cost of 20c, CME will have massive margins once they get the project up and running with the current spot price of $65 tonne there are few coal bargains left in the market, remember the coal shares will surge like their iron ore counterparts once the price rise is agreed.

Australian queue-cutting set to fuel the rising price of coal
Another surge in the price of coal is feared after the operator of the world’s biggest coal export terminal cut the number of ships permitted to load at the port of Newcastle in Australia.
Queues at the port, which exports coal from the Hunter Valley mines, reached a peak of 79 vessels in the summer as Asian power producers scrambled to fill up in anticipation of coal shortages this winter. To reduce congestion, last week the port operator cut export allocations for the fourth quarter of this year by two million tonnes.

The price of coal in Europe has risen by 50 per cent this year, bearing down on the profit margins of big coal users, such as cement-makers and power generators. Over the past year the share price of Drax, owner of Britain’s biggest coal-fired electricity generator, has fallen from a high of 929p in August last year to 615p. In Europe, a spot cargo of South African coal was reported to have changed hands at $115 per tonne as a European utilty sought to make good a delayed shipment.

“So many utilities and cement companies are looking,” one trader said.

“They will pay, but they are desperate that no one finds out.”

Meanwhile, Japanese and Chinese utilities are scrambling to secure supplies. Last week, several Japanese power companies agreed to pay an Australian mining unit of Peabody Energy $68 per tonne for fourth-quarter coal, a 25 per cent increase on the price in the early part of the year.

Negotiations for 2008 coal are continuing between the Japanese utilities and Australian producers, such as Xstrata and Rio Tinto, but the expectation is that prices will rise.

The surging coal price has several causes, analysts and energy traders say. Soaring energy demand is one – coal hitherto has been a cheap, albeit a dirty and carbon-rich, alternative to oil and natural gas. When oil and natural gas prices are high, power companies switch to coal to keep their electricity competitive. The high oil price has boosted global demand for coal, which rose 4.5 per cent last year.

Meanwhile, China continues to consume more. It is the world’s biggest coal producer, but the People’s Republic became for the first time this year a net coal importer and its ravenous demand for energy will continue to boost prices in Australia.

The bigger problem is infrastructure bottlenecks. According to Dresdner Kleinwort Benson, China is building 70 gigawatts of coal-fired power generation every year and the world has not enough port or shipping capacity to handle the demand.

Waratah Port Services, which operates the Newcastle port terminal, has already reduced output by four million tonnes this year.

“Port infrastructure is no longer adequate to deal with rising volumes - thus driving up freight rates,” Ajay Patel, a Dresdner Kleinwort Benson commodity analyst, said. A shortage of ships has pushed European prices to record levels.

The price of coal delivered at Rotterdam surged past $100 per tonne at the end of September, as the cost of moving cargoes of fuel escalated to levels never before seen. The Baltic Exchange’s dry freight index continues to break records almost every week, having crashed through the 9,000 level at the end of September. In the space of a month, it rose 2,000 points, reflecting surging demand from transporters of minerals – coal and iron ore – as well as grain.

The energy squeeze, which is keeping coal buoyant, has generated demand for newer products, such as biofuels, adding further pressure on the market for vessels that can move large cargoes of commodities.

Times Online - 8-Oct-07
Click to expand...
 
Watched this one this afternoon & it moved very quickly in the last hour, from 4.9 - 5.5c Very strong buy side & expecting an overdue announcement anytime which could push the SP strongly. I spoke to the company last Tuesday to try to guage when the anticipated ann. was coming out & was told that it was more likely withing a couple of weeks than a couple of months. So, anytime now & with current spot prices for coal this could prove very promising.
 
Looks like CME is in play again today with a large increase in buyers in the last 30 minutes or so.

With each passing day the company must be getting closer to sealing the massive South African coal deal, once announced this will have a massive impact on the company and should propel the share price much much higher.

Also important was how the shares bounced strongely off the 6.1c level, looks like a strong base has been formed for the next up leg.
 
Some very large orders now stacking up, what is very interesting is that they are right at market prices, so they are obviously real.

If the 7c level was to break it could start to go higher very quickly, it has proven that in the past.

Don't underestimate the effect this coal deal will have on the shareprice of CME, many have been sitting back waiting for the deal to be completed. And once it finally is, all hell will likely break loose.

Remember they signed the exclusive agreement back before coal prices began to surge, making this deal one of the buys of the century


Just look at the recent spot premium paid for South African Coal, nearly double the 2007 contract price.

In Europe, a spot cargo of South African coal was reported to have changed hands at $115 per tonne as a European utilty sought to make good a delayed shipment
 
I guess that a few are concerned about the purchase of the Whitbank project, due to the problems with the land title.

Due to the favourable terms for CME they will make sure this deal goes ahead, and as the announcement gets closer the shareprice will surge once more.

If anything this provides a good entry point for those who missed the recent shareprice surge.
 
Just spoke to one of the directors and he said they will let the market know in the next 2 weeks whether the Whitbank project goes ahead. Other land up for grabs in the region sitting on coal that they might end up with.This could rollercoast waiting on news:confused:
 
Hmm... What is happening at this joint? Just noticed that they've now changed the company name to Firestone Energy Limited (FSE), and dropped 5% today.
 
So can someone please tell me why there is no FSE thread for this stock now? There are things happening as we speak? Mick are you onto it?
 
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