LNC - Linc Energy

[Mickel]

Interesting comments by PB following yesterday's announcement-

"Linc Energy Chief Executive Peter Bond, who owns 40 percent of the company, said the joint venture aims to produce 100,000 barrels a day of diesel for the Chinese market.

The venture with GCL Projects, a unit of Hong Kong-based Golden Concord Holdings, will build plants that will turn gas extracted deep underground from coal into diesel. Their first gas-to-liquids plant is slated to start in 2014.

"I think China will become a significant player," Bond told Reuters in an interview.

"You've got so many advantages in China in terms of fast-tracking a project, cheap capital, a huge consumer base, a fairly low tax regime," he said.

He said ideally half of Linc's production would be in China within three years.

"It will take probably four to five years before it's 50 percent of our income," Bond said."
and
"Bond said the joint venture's first plant in China would probably be in Inner Mongolia. It aims to start construction later this year."

http://uk.news.yahoo.com/chinas-gcl-australias-linc-diesel-deal-linc-shares-022739579.html

It appears that the Gassifiers could be up and running at least 12 months before the GTL plant is finished. What to do with the gas ????

Did someone mention EOR ? Any depleted oil wells close to Inner Mongolia ? Mmmmm !
Have a look at this web page-

http://en.wikipedia.org/wiki/Petroleum_industry_in_China

The North East section of Inner Mongolia is adjacent to many oil fields and the Daqing and Dadang fields were established in the 1960's.

Can anyone add to this picture ?

 

[Calliope]

Can anyone add to this picture ?

Yes. Peter Bomd is the master of spin, or to put it bluntly he is full of bullsh*t.

 

[Smurf1976]

In theory the gas could also be used as fuel in the conventional manner for factories, power stations, cement works and the like. Whether or not there is any such facility within reasonable distance I don't know, but it's technically very possible to use the gas in this way.

That said, I don't really trust the promises of this company and won't until I see them actually achieve something in terms of production.

 

[Mickel]

PB speaks to BRR about latest announcement regarding the China deal.

he states the documentation should be signed "within a few weeks" and is
confident that gas will be flowing by the end of the year.


http://www.brrmedia.com/event/96214/partner/couriermail

 

[topsprog]

I tried to find any press releases by GC related to the Linc announcement. None located. I proceeded to try and untangle the various Golden Concord entities - I suspect a knowledge of Chinese might have helped. The Hong Listed Company seems to be described as a subsidiary of GC Holdings, however I had no luck untangling the corporate structure of the various entities/affiliates.

More interestingly way back in 2007 USA Synthesis Energy Systems Investments Inc. announced a contract with Golden Concord to build a coal gasification plant in Inner Mongolia, China, with plans to use the abundant lignite present there. I have not found a 'Link' to the fate of this deal - I suspect a Big Zero. More on this at:

http://www.siliconinvestor.com/readmsgs.aspx?subjectid=56062&msgnum=897&batchsize=10&batchtype=Next

 

[Mickel]

This may be of interest regarding Golden Concord's financing-

"GCL-POLY ENERGY : Golden Concord Group Obtained Substantial Support from China Development Bank Corporation as the Two Parties Entered into A Financing Cooperation Agreement for Development
06/01/2011 | 08:00pm

For Immediate Release 1 June 2011

Golden Concord Group Obtained Substantial Support fromChina Development Bank Corporation as the Two Parties Entered intoA Financing Cooperation Agreement for Development
On 1 June 2011, China Development Bank Corporation and Golden Concord Group Limited (“Golden Concord Group”, the “Company” or the “Group”) signed an agreement for financial development and cooperation in Hong Kong, pursuant to which both parties agreed to build a new investment and financing model which would deepen cooperation in all front between the financing group and industrial group and capitalise on China Development Bank Corporation’s financial capabilities as well as the Group’s competitive edges in industrial investment and management expertise. The agreement aims to establish a long-term and stable strategic partnership for mutual benefits and development.

Pursuant to the agreement, China Development Bank Corporation will provide financial support to Golden Concord Group’s domestic and overseas investment projects in foreign currency and Renminbi in the next 5 years in order to fulfill the capital requirements of Golden Concord Group for its future development. GCL-Poly Energy Holdings Ltd. (“GCL-Poly”) (Stock code: HK.3800) is the major support target which engages in businesses including solar photovoltaic materials, green energy, solar farm system integration and overseas solar farms. The financing support is to ensure GCL-Poly will undergo further technology innovation, improvement of production capacity and reduction of production costs, thus ultimately downsizing the costs of the global solar power generation industry. The agreement also involves other green energy industry projects of Golden Concord Group in relation to energy saving and storage."

http://www.4-traders.com/GCL-POLY-E...rt-from-China-Development-Bank-Corp-13650787/

 

[johnpw]

Is the Teresa coal ever going to be sold? This has been going on for 3.5 years now!

Hi Jonathon111



I read that too but I'm sorry, I don't believe it, for the following reason.

The sale announced on 5th Sep 2008 http://www.lincenergy.com.au/pdf/asx-94.pdf was preceeded a few months earlier by a Jorc upgrade for Emerald/Teresa to 470 million tonnes (which was expected to be increased to 650 million tonnes) http://www.lincenergy.com.au/pdf/asx-87.pdf.

The Merriman Curhan Ford's analysis dated 17/07/09 said Emerald was 852 MT and Pentland 266MT. Here is that link http://www.mcfco.com/extend_Research...7-17-09).pdf

Also do not forget we will soon get updates on Galilee that could be significant (maybe to 10 billion) but current JORC is 7.8 BILLION tonnes.

That is a LOT more coal than was sold for AUD 1.5 billion in Sep 2008 and since then thermal coal prices are only down 35% (see my post above) from Sep 08 whilst the Emerald/Teresa inferred resource is up 80% (from 470 to 852).

AUD 1.5 billion for Emerald alone maybe!

For Pentland and the MASSIVE Galilee too...I'd want lots, lots more. Maybe AUD 4-6 billion??? I think that is part of the reason for slow progress, i.e. too few companies around that can swallow that size of investment. We shall see but I think my logic above makes sense. Feel free to comment even if it is a slapdown for being ever hopeful. Note: I am a long time holder so definitely positively biased :

 

[basilio]

Real question mark about the Teresa coal sale. LNC is going ahead with developing the mine with a view to improving its saleability but perhaps the time is passing for big coal mine sales.

What does concern me is the current unnerving collapse of the SP. Currently 1.02 and under heavy selling pressure with little support. Ironically Per Bond is flying around the country on a jet fuelled with LNC produced GTL diesel. Doesn't seem to be impressing the market at the moment.

And yet... within a few weeks LNC will be receiving a $60m cash injection for 2.5% of its shares and the finance to start building a UCG plant in China. Seemingly all totally discounted by the market.

Is LNC the best bargain in the market at the moment??

 

[Mr McGee]

Is LNC the best bargain in the market at the moment??

I hope so! The SP has me stuffed??

 

[basilio]

Still pressure on LNC SP. There are now some press stories on Peter Bonds flight around Australia using synthetic jet fuel produced at Chinchilla. And the picture is not a good look.

Unfortunately the article from the Perth paper confused UCG with coal seam gas ands opened up that particular can of worms. It will be interesting to see how quickly that mistake gets corrected.

I also understand there is still heavy short selling of LNC.

http://www.perthnow.com.au/linc-ene...est-new-jet-fuel/story-fn6mh7xb-1226347581165

 

[Calliope]

Peter Bond was interviewed by Steve Austin on ABC Morning show. I think it prompted todays spike.

 

[Toolong]

Another fantastic day for LNC.. Watched an interview with PB the other day and when asked why the share price had fallen despite the jet promo PB said, 'I think the market wants to see execution'... Hello Hello.. McFLY is there anyone home? Real execution without the spin PB would be a start. If you havn't noticed the market doesn't trust you anymore.

Bought in at over $3 in 2009, so staying in just to see how much of a disaster this mgt team is.

 

[Mr McGee]

So you bought into this stock when it was close (if not AT) its three year high? Bugger! I have a HUGE holding in this company and although the SP is a worry at the moment, I just look at it as the best garage sale of the year! The real estate that this company owns is worth more then the book value at the end of today, so Im not concerned. I buy more if I can handle the stress (I can), take a deep breath and carry on.

 

[basilio]

It is unnerving to see such a slump as todays effort. I guess a lot of stop losss were hit which just kept dropping the price.

Certainly the value of LNC's assets are now above its SP. But then in 2008 there were more more than a few companies selling for far less than the actual cash in the bank let alone producing assets.

Getting the initial cash for the Concord deal and proving the UCG-GTL process in China has to be a turning point. But the current collapse is very testing....

 

[StumpyPhantom]

It is unnerving to see such a slump as todays effort. I guess a lot of stop losss were hit which just kept dropping the price.

Certainly the value of LNC's assets are now above its SP. But then in 2008 there were more more than a few companies selling for far less than the actual cash in the bank let alone producing assets.

Getting the initial cash for the Concord deal and proving the UCG-GTL process in China has to be a turning point. But the current collapse is very testing....

The indicators that I look at are still pointing downward? I'm keen to hear from any technical analysts as to whether they can discern a stopping (or even slowing) of this trend.

 

[basilio]

Interesting to see Clive Palmers Galilee coal play could be in doubt. Seems like a few of the partners have pulled out.

At this stage there seems no suggestion that LNC's sale partner (Adani) is not going ahead at full steam. In fact at last call they were planning to upgrade the output and thus increase the royalty stream for LNC shareholders.

This deal alone is worth at least $120m plus a year income to LNC over 20 years or perhaps (my guess) $800-1b immediate cash in hand.

At last SP LNC was valued at $457m... Unless the Adani project has serious undisclosed problems this deal alone makes LNC incredibly undervalued.

Galilee Coal Royalty, Queensland

As part of the sale of its Galilee tenement (renamed ‘Carmichael’) to the Adani Group of India last year, Linc Energy secured a royalty of $2 per tonne (indexed to CPI) over the first twenty years of production. With Adani planning a 60 million tonne per annum coal mine on the site, Linc Energy holds an extremely valuable royalty deed that may earn in excess of $120 million per annum at full production.

Since the sale last year, Adani has secured the 99 year lease of the X50 Abbot Point Coal Terminal near Bowen and is a preferred proponent to develop the proposed Dudgeon Point Coal Terminal near Mackay. Adani is also expected to bid for one of the new terminals at Abbot Point. Linc Energy will continue to update the market on this future revenue stream as Adani work towards their stated goal of having first production from Carmichael in 2014.

http://www.theage.com.au/business/p...rchase-contract-cancelled-20120510-1yfpc.html

http://www.lincenergy.com/data/asxpdf/ASX-LNC-406.pdf

 

[calais]

The announcement on the 16th April tells us about the J/V with GCL, having 66% and Linc 33%. But does not say who will pay for the capex of the projects.
Pb says on BRR the construction should start by years end and be reasonable in size.
No mention of how many barrels per day or costs.
I don't understand the following statement from the announcement 'commercial UCG gas facility consisting of initially four (4) commercial size UCG gasifiers working in parallel (with GCL having an option to expand this to six (6) gasifiers).'

Is Linc starting with syngas only or using ucg/gtl for the first project in China?

 

[basilio]

The announcement on the 16th April tells us about the J/V with GCL, having 66% and Linc 33%. But does not say who will pay for the capex of the projects.
Pb says on BRR the construction should start by years end and be reasonable in size.
No mention of how many barrels per day or costs.
I don't understand the following statement from the announcement 'commercial UCG gas facility consisting of initially four (4) commercial size UCG gasifiers working in parallel (with GCL having an option to expand this to six (6) gasifiers).'

Is Linc starting with syngas only or using ucg/gtl for the first project in China?

The announcement said that that Concord would provide $15m for construction of the UCG capacity (over 3 years) and that CAPEX for the overall project would be the responsibility of GCL.

The documents should be signed up fairly soon with a $60m cheque to LNC for 2.5% of stock and another $60m (for another 2.5% stake) when the UCG facility is completed.

This should be the game maker for LNC. It will be the commercial proving ground for their UCG to GTL promise which they can then replicate around the world in the billions of tons of underground coal they have purchased.

On paper one would question why GCL would pay the $4.50 a share for what are currently 68c shares. The clever part (IMO) is that by proving the technology in China and getting the license and technology at quiet a reasonable price GCL will turn the speculative value of LNC underground coal into commercial reality thus easily justifying the introductory price.

And meanwhile the SP is still in free fall.

 

[StumpyPhantom]

And meanwhile the SP is still in free fall.

Why the sad face?

The real question is how illusory or speculative the promise/potential being shown here is. And I would apreciate your view on this, as it's been earlier said that this Chinese deal has already created the platform for it to launch into the stratosphere.

If you're persuasive enough about this (including persuading yourself), then you should be and loading up for whatever you're worth, bringing the dollar cost average down (if you entered previously) and just waiting for it to go back up.

It might be where Angels fear to tread, but that's the sort of opportunity that this irrational market shows up. Do we know whether Peter Bond is loading up at this price?

 

[basilio]

It is a very conflicted situation Stumpy.

In the big picture there is the possibility that we will going into financial meltdown if/when Europe falls apart. Collapsing banks, collapsing economies , collapsing countries will destroy people and businesses without discrimination. On the energy front such a collapse would drop energy prices sharply which in the short-medium term throw LNC's model into a heap. I think there are many iron clad companies at the moment looking very cheap because of this fear.

With regard to LNC we can't say they have met their targets. Teresa should have been sold by now to ensure financial stability and capacity for financing the UCG - GTL projects. I'm not that convinced the Wyoming oil fields are coming up to speed as predicted with the CO2 injection. I think that has slowed down. The Alaskan fields were supposed to show commercial gas early in the piece - but didn't . The long term looks good - but that is years away.

I'm still wondering how cost effective and technology effective the UCG -GTL process is. As far as I can see LNC has not publicly laid out the proposed technology stream which will be implemented in China. Is there a clear, cost effective GTL plant ready to run ? Is it LNC's technology or are they getting off the shelf from another provider ? No problem if they do but I'd like to know.

I have also been keeping an eye on the UK fuel cell technology (AFC fuel cell - LNC has 12 %) which could be a perfect fit for LNC's UCG process. It looks like the fuel cell is operating exceptionally well but I havn't seen any indication that LNC intend to commercialize it in the near term. That's disappointing.

When you add up the underlying resources and opportunities LNC has, it is a multi billion dollar company. But that may not be enough to win if the whole game gets blown up or it can't play it's hand right. That is the dilemma.