CQC - Cuesta Coal

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Matthew Crawford on BRR.
http://www.brrmedia.com/event/102346/mr-matthew-crawford-managing-director-and-ceo

 

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Amberley Deposit Resource Upgrade

● 54.7Mt JORC Inferred Coal Resource - Increased from 5.1 Mt
● Resources defined to a depth of 150 m
● Current Total Coal Resources of Cuesta Coal projects stand at 138.5 Mt
o Amberley Deposit in Clarence Moreton Basin 54.7 Mt o Thorn Hill Deposit in Surat Basin 44.3 Mt
o Moorlands Deposit in Western Bowen Basin 39.5 Mt
● Drilling continuing at Yellow Jacket Project at EPC 1802 - Eastern Galilee Basin

6th September 2012: Cuesta Coal Limited (ASX: CQC) (“Cuesta”) is pleased to announce a resource upgrade to 54.7 Mt of Inferred Coal Resource in accordance with the JORC code (2004) guidelines at its 100% owned Amberley Deposit (EPC 2127) in the Clarence Moreton Basin, Queensland.
During May and June, Cuesta completed a 14 open and 3 cored drilling campaign totalling 2,040m of drilling, which was combined with approximately 44 historic drill holes to produce the revised resource calculation of the deposit. All holes completed were geophysically logged.
Coal measures in this region are banded Walloon Coal measures. The Amberley Project deposit is situated along strike extensions of existing known coal deposits and is found in eight seam groups – UNA, UNB, A, B, C, D, E & F. Cuesta’s drilling intersected between 2 to 8 seams with individual seam plie thickness varying from 0.1m to 1.9m, sufficient confidence in seam correlation was achieved.[SUP][/SUP]

 

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Beijing Guoli strengthens commitment to Cuesta with new Board appointment

● Appointment of Ruoshui Wang as Non‐Executive Director of Cuesta
● Mr Wang responsible for running Beijing Guoli’s overseas investments
● Brings significant corporate and M&A experience to Cuesta
● Ongoing support from Beijing Guoli provides foundation to fast‐track growth

Cuesta Coal announce that it has strengthened its Board of Directors with the appointment of Mr Ruoshui Wang as a Non‐Executive Director.
Mr. Wang is a senior executive with Beijing Guoli (“Guoli”) and he has over 15 years’ experience managing overseas investments in coal, real estate and agricultural projects.
Mr. Wang has been with Guoli for over 10 years and has held a number of roles including Director of the Beijing Guoli Energy Investment Co. Ltd, Assistant President of Sino‐Australian International Trust Co. Ltd, and more recently, as the Director and General Manager of a number of investment subsidiaries of Beijing Guoli.
Mr. Wang was instrumental in negotiating Guoli’s $20 million investment in Cuesta Coal and has been active in strengthening the relationship between the two Companies which will support Cuesta’s ongoing development.
Mr. Wang holds a Bachelor and Masters Degrees in Thermal Engineering from Tsinghua University and has also completed a Ph.D in Management from Tsinghua.
Cuesta Coal’s Chairman, Mr. Ian Richer commented: “We are delighted to have attracted such an experienced and talented executive to Cuesta’s Board. We have worked closely with Mr Wang and his team for some time and his commitment to Cuesta has been very valuable.
“Mr. Wang has a track record of success in the coal sector, he has an excellent understanding of the Australian coal industry, and he will be instrumental in supporting Cuesta’s organic growth and M&A initiatives.
“Guoli’s commitment to Cuesta is well reflected in Mr Wang’s appointment and this follows the appointment of Mr Huaixi Zheng in July.

 

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Update on Yellow Jacket Project Drilling Program - Eastern Galilee Basin

● Coal has now been intersected over ~ 15km², east of the conventionally known crop line. The area and coal occurrence was recently named by the company as the “Yellow Jacket prospect”.
● Discovery of coal for the first time in this frontier region was initially announced by Cuesta Coal Limited (pre ASX listing) on the 5th Sept. 2011 via an Argonaut Resources NL (ARE) ASX release.
● Cuesta Coal in the current program has now completed 12 Open PCD open holes totalling 1,975m, all to target depth.
● Coal lies less than 130m from the surface, with two seams present across all the drilled area. The prospect remains open to the east and south east.
● EPC 1802 which includes the Yellow Jacket project has an Exploration Target of 200– 1,000Mt.
● Cored drilling to occur in coming weeks will obtain primarily coal quality data, but also indicative geotechnical information and other geological information.
● A closed spaced gravity survey was completed over Yellow Jacket and wider target area to test effectiveness to define coal and for its potential application across Cuesta Coals other extensive Eastern Galilee targets and tenure.

 

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Interest is starting to renew in CQC lately. Buyers have been lining up, current SP back to the 10c level with the next buyer at 10.5c and the nearest seller at 15c.
No reason I can see at this point for this action.

 

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QUARTERLY ACTIVITIES REPORT

CORPORATE
 Exploration activities under budget, on schedule and resource targets achieved.
 Cash on hand $18.266m
 Mr Ruoshui Wang (representative of Beijing Guoli) invited to join the Board of Cuesta Coal subject to shareholder approval at the AGM

PRIORITY PROJECTS
 West Bowen Project
• Moorlands Deposit - 45% Resource Upgrade from 27.3Mt to 39.5Mt JORC Inferred announced 20 August
• Resource definition drilling commenced early October with promising intersections validating prospective open cut target area
• Cuesta’s priority project, to transition to an advanced project
 Eastern Galilee Project
• Coal Intersected over 15 km², maiden resource targeted for February / March 2013
• Joint Venture and Farm-In Agreement with QCI (Galilee) Pty Ltd announced on 8 August for the Snake Creek Project in the Eastern Galilee Basin
 West Emerald Project
• Metallurgical Coal target identified

PROSPECTIVE PROJECTS
• Amberley Deposit - Resource Upgrade from 5.1Mt to 54.7Mt JORC Inferred announced 6th September

 

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CQC seems to be hitting the radar of a few people lately.

Buyer interest has definitely increased with the share price moving from 10c to 13c, with the next buy sell split at 13.5/14.5c.

Market Cap and Cash position are still remarkably close. Cash position of $18m and MC of around the $26m mark. (This MC is Including vested 2 tranche of performance shares to be issued).

Cash burn for 2012 FY expected to be $5m.

A recent updated investor presentation on October 31st may have been the catalyst for recent interest.

CQC actively seeking for future JV partners for further derisking of projects after the QCI JV.

 

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Positive day for CQC.

410,385 of the 428,718 shares traded were at the 15c mark. Sell side from today's action has dried up, of course this could change completely at the open of play tomorrow.

The last time CQC was at the 15c mark was way back on June 1st 2012.

As I say often, a MC with a cash position like this is one that warrants further research.

 

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REQUEST FOR TRADING HALT
The Directors of Cuesta Coal Limited (ASX: CQC) request that a trading halt be granted by ASX immediately with respect to the following securities;
● CQC Fully Paid Ordinary Shares
For the purposes of Listing Rule 17.1, the Directors of CQC provides the following information:
(a) The trading halt is necessary pending release of information pertaining to the announcement of a significant acquisition, as otherwise trading in CQC shares may take place in an uninformed market;
(b) It is requested that the trading halt remain in place until 10am (Sydney Time) Wednesday 12 December 2012 unless before that time CQC makes an announcement;
(c) It is expected that the trading halt will end following the release of an announcement pertaining to the significant acquisition;
(d) The Directors of CQC are not aware of any reason why the trading halt should not be granted; and
(e) The Directors of CQC are not aware of any other information necessary to inform the market about the trading halt.

 

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CQC has performed nicely for me lately, nothing outrageous in SP spike or volume traded, very much a slow burn, but still a high of a 65% increase since my initial purchase. I have taken some money off the table on this recently in the name of risk reduction, nothing to do with my belief in CQC being able to extend these gains.

Latest news since my last post have been;

http://www.asx.com.au/asxpdf/20121210/pdf/42btsmd2l30wjq.pdf
35% increase in JORC Resource at Moorlands Deposit to 53.4Mt
● Resource increases to 53.4 Mt at Moorlands Deposit (EPC 1738) – a 35% increase on previous resource of 39.5 Mt
● 14.6Mt Measured and 9.7Mt Indicated JORC Resource in open cut target
● 4:1 to 6:1 strip ratio defined in open cut target
● Raw Coal Analysis in line with expectations
● Mine scoping study to commence in Q1 2013
● Previously untested satellite gravity targets identified within close proximity to deposit
● Moorlands remains a priority target for the Company with plans to fast track the Deposit into production
● Deposit is located 14km west of the Blair Athol Coal Mine owned by Rio Tinto Coal

http://www.asx.com.au/asxpdf/20121212/pdf/42bwfkqp6fwwck.pdf
Cuesta acquires Orion Coal Project to create largescale 136Mt+ West Bowen Coal Project
● Company‐transforming acquisition which fast‐tracks Cuesta from explorer to developer
● Attractive acquisition price of $18.2 million
● EPCs adjacent to Cuesta’s West Bowen Project creating large open cut thermal coal project 14km northwest of the Blair Athol Mine
● The acquisition and recent resource upgrade at the Moorlands Deposit (EPC 1738) creates total JORC resources of 136.3Mt with additional 85 ‐ 150Mt exploration target 1
● Combined resources modelling and estimate underway to define a new project resource
● Cuesta in discussions with cornerstone investor Beijing Guoli regarding funding support

http://www.asx.com.au/asxpdf/20121212/pdf/42bwfmk79jp8ks.pdf
Investor Presentation

 

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Cuesta raises $12m at 18 cents to accelerate development at Moorlands

● Placement made to Beijing Guoli at a premium to the current share price
● Funds used to redeem $5m of the $10m Convertible Note issued for the Orion acquisition
● Placement provides significant working capital to progress the Moorlands thermal coal
project
● Moorlands located 14km west of Blair Athol
● Beijing Guoli continues to support Cuesta’s growth strategy

22 February 2013: Cuesta Coal Limited (ASX:CQC) (“Cuesta”) is pleased to announce that it has successfully executed a Share Placement Agreement to raise $12 million by issuing 66,666,667 new ordinary shares at A$0.18 per share to the Company’s major shareholder, Longluck Investment (Australia) Pty Ltd, a wholly owned subsidiary of Beijing Guoli Energy Investment Co.
The funds will be used to reduce the Convertible Note liability and to fast‐track the Company’s priority development project at Moorlands, located 14km west of the Blair Athol Coal Mine in the Western Bowen Basin in Queensland.
Use of Funds
Cuesta will use $5 million to redeem 50% of the $10 million Convertible Notes that will be issued to the vendors upon settlement of the acquisition of the Orion Coal Project which was announced to the market on 12 December 2012. The remaining $7 million will be added to the existing cash reserves of $10.40m (at 31 December 2012) for Cuesta to accelerate development of Moorlands. Details of the 2013 development program will be released to the market in the near future.

Terms of the Share Placement Agreement
Under the terms of the agreement the following are key terms and conditions:
● $12 million raised at a share price $0.18 to issue 66,666,667 new ordinary shares.
● $5 million to redeem Convertible Notes.
● $7 million to be added to working capital.
● Completion date is on or before 31 July 2013.
● The placement is subject to Chinese Regulatory, FIRB and Shareholder approval.
● Cuesta Coal is required to obtain an Independent Expert’s Report
● Under the terms of the agreement Beijing Guoli will be entitled to nominate an additional Director to
the Cuesta Coal Board

 

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Geological Model and Resource Estimate Completed at Cuesta’s Priority Moorlands Project

● 146.1Mt JORC Resource at the Moorlands Project with significant exploration upside identified
● Moorlands is an open cut thermal coal project containing;
o Primary coal seams consist of B4 averaging 6m, B8 averaging 10m, B9 averaging 3m
o Secondary coal seams consist of B5 and B7 both averaging 1.5 – 2m
o Several coal seams and individual coal plies won’t require washing, enhancing project economics
● Xenith Consulting have commenced the Mine Scoping Study, expected to be finalised in 3 – 4 weeks
o Mine Scoping Study is targeting areas with average stripping ratios of <5:1
● Moorlands remains Cuesta’s Priority Development Project with expectations of a robust thermal
coal project

 

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Beijing Guoli given FIRB approval for $12m share placement in Cuesta Coal at 18 cents per share

Beijing Guoli to continue to support Cuesta’s Growth and Development
Cuesta Coal today announced that it has been notified by Beijing Guoli Energy Investment Co., Ltd (“Beijing Guoli”) that it has received Foreign Investment Review Board (FIRB) approval for its investment in Cuesta through its wholly owned subsidiary Longluck Investment (Australia) Pty Ltd (Longluck).
On 22 February Cuesta announced it had executed a Share Placement Agreement to raise a further $12 million by issuing 66,666,667 new ordinary shares at A$0.18 per share to Beijing Guoli. The funds will be used to fast‐track the development of Cuesta’s flagship Moorlands Project which now has a 146.1 Mt JORC resource, and significant exploration upside.
Once this $12 million placement is completed, this will take Beijing Guoli’s total investment in Cuesta to $32 million.
Cuesta’s Managing Director Matthew Crawford said: “FIRB approval marks an important milestone in completing this latest placement and we are pleased to confirm that Beijing Guoli is very committed to supporting Cuesta’s growth strategy.
“Cuesta and Beijing Guoli are working closely and cooperatively and we continue to strengthen our partnership. Our collective aim is to achieve production at Moorlands as soon as possible, and we are working hard to achieve tis.”

 

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I thought this article may be of interest to those researching cashed up specs

http://www.resourcestocks.com.au/pr...Download.asp?File=Cuesta+Coal.pdf&Size=915757

 

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Latest Investor presentation from Cuesta Coal.
http://www.asx.com.au/asxpdf/20140312/pdf/42nb3tnmfcrz8q.pdf

Snake Creek Joint Venture Tenement Granted.
http://www.asx.com.au/asxpdf/20140311/pdf/42n96cmnz1nycn.pdf
Under*the*terms*of*the*agreement,*QCI*is*able*to*earn*up*to*a*51%*interest*in*the*two*tenements.**QCI*can*earn*
25%*interest*through*the*staged*development*and*expenditure*of*$1.5*million*and*a*further*26%*through*the*
expenditure*of*an*additional*$1.5*million.*
QCI* and* Cuesta* will* shortly* commence* planning* of* the* 2014* exploration* and* look* forward* to* working*
collaboratively*on*the*Joint*Venture.**

92% Resource Increase In CQC's Flagship Project.
http://www.asx.com.au/asxpdf/20140304/pdf/42n4yvq0n9wg4r.pdf
Highlights
● Measured*JORC*Resource*of*118.9Mt*represents*an*increase*of*103.5Mt**
● Particularly*encouraging*is*consistent*coal*quality*throughout*the*Moorlands*deposit**
●Proposed*South*Pit*average*stripping*ratio*of*3.2:1*maintained*and*majority*of*resource*now*in*Measured*and*Indicated*Category*
● Additional*coal*resources*identified*in*Proposed*South*Pit*enhancing*mine*design*layout*
● Average*23m*cumulative*coal*thickness*of*primary*seams*throughout*the*deposit*
● Maiden*Reserve*assessment*underway,*geological*model*to*be*used*for*Definitive*Feasibility*Study

Reserve*Assessment,*Definitive*Feasibility*Study*and*Infrastructure*arrangement*
A*maiden*reserve*assessment*is*underway*by*Cuesta’s*consultants*Xenith*Consulting*and*it*is*anticipated*to*be*
completed*in*4*to*6*weeks.*
*The* geological*data* and*the*upcoming*reserve* calculation* are* key* components*to*the*Moorlands*Definitive*
Feasibility*Study*(DFS).**Activities*in*relation*to*the*DFS*have*focussed*on*detailing*the*scope,*key*deliverables*
and*critical*path*activities.*
*Concurrently*with*the*DFS,*Cuesta*is* continuing*to*make*progress*to*secure*secondary*market*port*and*rail*
capacity*for*the*Moorlands*Project.**Cuesta*has*been*negotiating*with*a*third*party*user*for*a*number*of*months*
now*and*is*targeting*to*finalise*these*negotiations*and*execute*port*and*rail*access*agreements*in*H1*2014.

 

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A 58 page report, commissioned by Cuesta, and has been prepared by Andrew Pedler, the principal of Matau Advisory Pty Ltd and is now available for viewing via the CQC website and this link.
http://www.cuestacoal.com.au/wp-con...140321_CQC-Research-Report_Final_Released.pdf

Andrew Pedler, has a strong background in resources including 9 years as an exploration and mine geologist, and 25 years as a senior resources analyst.

Some out-takes from the report that may be of interest.

The 12 month target price is 16c vs current closing price of 9.5c.

The unrisked valuation, based on the diilution required to fund Moorlands, is 35c.

CQC is evaluating 2 other projects, West Emerald and Eastern Galilee.

There are another 6 projects within the very early stages of evaluation.

Beijing Gouli Energy Investments holds a 36.4% cornerstone stake in the company and according to the report is a potential offtake partner.

Demand growth for thermal coal is predicted at 4.6% p.a in the Asia-Pacific region to 2022. Japan and South Korea, for example, are planning the construction of coal-fired energy facilities within the next 5-10 years - which aligns with CQC's targets.

The thermal coal product from CQC’s Moorlands project is good quality low-sulphur thermal coal. The deposit has shallow, thick coal seams between 4m & 10m giving a target strip ratio of 3.2:1 for the South-Pit and about 5:1 for the North–Resource area.

The Moorlands project is near the closed Blair Athol thermal coal mine operated by RIO (Linc Energy Ltd recently announced a conditional agreement to acquire and recommence mining at Blair Athol). About 14 km of road haulage would be required to deliver into that load-out. However CQC has included costs for a stand-alone rail loop and load-out in its capital estimates. Power is anticipated to be brought in from Blair Athol. Port capacity allocation is anticipated to be available on secondary markets.

 

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CQC announced a trading halt for a cap raising, to be followed by an announcement pertaining to the cap raise.
http://www.asx.com.au/asxpdf/20140508/pdf/42phw0cwj9fzlk.pdf

Cuesta has the Eastern Galilee Project which lies 30km West of Clermont.

Today an announcement was made by the Qld Govt pertaining to a $16B mine in the region, the Carmichael Coal Mine is quoted as North-West of Clermont.
http://www.abc.net.au/news/2014-05-...proves-16b-coal-mine-in-galilee-basin/5438704

CQC could benefit greatly from this, most notably the 189km railway line to extract resources.....

With massive investment in a region usually comes speculation as to the surrounding tenements/companies.

 

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Cuesta Significantly Strengthens Balance Sheet with Placement to Major Shareholder

● Conditional Placement of $8.5 million to major shareholder Beijing Guoli
● Commitment from Beijing Guoli for an additional $6.5 million
● Issue price of 10.3 cents per share represents a premium to the last traded price
●Funds to be applied to advancing the Definitive Feasibility Study for the Moorlands Project and repayment of $5 million Convertible Note liability

Placement is subject to approvals.