LNC - Linc Energy

awg · 24 September 2008

basilio said:
IMO there is much to like about Linc Energy.

To make all this happen in a big way I believe LINC should find a way to become project of national perhaps international significance. This could just mean being recognised as really important and obtaining the sort of political support that gets approvals done quickly and support for genuinely valuable technology. On the contra side LINC could then make a move to develop and promote its coal capture technology ASAP and ensure its widespread use without regard to profit maximisation. In an industrial world that is still so short sighted it won't recognise the clear and present dangers of Global Warming it would be a most powerful voice.

So what remains? We still haven't quite got liftoff with the pilot plant...I always like to see the final proof. And of course proposing a 20,000 barrel a day coal to diesel plant and actually bringing it on line are quite different events. Which is why I suggest being seen as a national leader in this field would be an astute move.

Any thoughts?

Basilio

A question I have been wondering.

If Linc is to go mega, then they would be hoping to get big bucks out of deals in China, India and Vietnam, as there is massive stranded coal in each of these countries.

How likely is it that these companies will basically "steal" the technology and process to some extent, and keep the profits at home?

I think it is probable they will try.

Cheap & nasty copies anyone?

Having said that, I am stil a true believer, and topped up again this morning.

As to the CO2 conversion, I am wary, has the ring of a great salesman to me.

I agree it would be a holy grail, and if it is to be practical, I want it to be Linc.

LittleMak · 25 September 2008

basilio said:
3)The CEO Peter Bond is an absolute livewire. His drive, creativity and public marketing skills are a significant point of difference to other similar companies. For instance CNX is on a similar path to LINC but has a considerably lower market value. I believe Peter is the difference

Basilio

The reason CNX have a lower market cap has nothing to do with management, PB or PR. Its because CNX currently have a lower resource base than LNC. So when valuing any company on current prospects etc this has to be taken into account and the Market Cap based accordingly.

CNX are also forging their own unique market and seem to be focusing more on Fertilizers, Plastics and Energy, where as Linc are focusing on Diesel and Jet Fuels.

Both Companies seem to be doing well so far and have massive futures. Their time has come!

basilio · 25 September 2008

LittleMak said:
The reason CNX have a lower market cap has nothing to do with management, PB or PR. Its because CNX currently have a lower resource base than LNC. So when valuing any company on current prospects etc this has to be taken into account and the Market Cap based accordingly.

CNX are also forging their own unique market and seem to be focusing more on Fertilizers, Plastics and Energy, where as Linc are focusing on Diesel and Jet Fuels.

Both Companies seem to be doing well so far and have massive futures. Their time has come!

Point partially taken LittleMak. I was referring to the fact that both companies are transforming low value stranded coal into high value products. CNX direction towards fertiliser/plastics and energy will also be very profitable.

CNX does have a lower resource base which IMO partially accounts for the lower market value. But I suggest that Peter Bond has been highly effective at promoting LINC as the new El Dorado and convincing many more investors to get on board. That is where the extra value has come.

But IMO on the basics CNX probably offers better value at the moment.

Cheers

(I have interests in CNC and LINC)

bluekat · 25 September 2008

Also maybe

Linc is Bond,s dream, I think he owns 62%.( correct me if i'm wrong )

Major shareholder in CNX is Incitex Pivot, hence their direction, Pivot keep a low profile at best, CNX tends to mirror that profile.

avaramo · 25 September 2008

This article may explain why LNC gets a little spike today. Pay particular attention to the comment which has now been repeated twice:

"Bond also flagged the potential sale of another coking sale asset."

http://www.businessspectator.com.au...t-diesel-plant-within-days-JS8W5?OpenDocument

bluekat · 25 September 2008

Great article, the news just keeps on coming.
With the demonstration plant, the results will have to be validated, so that could take a few days. Exciting times ahead.

bluekat · 25 September 2008

I guess with the sale of another coal asset, that will provide the cash required for the joint deal in China and provide enough cash for Vietnam, India and the USA. Again a great article.

Calliope · 25 September 2008

As somebody who likes to keep all bases covered, I should imagine that Peter Bond is doing as much as possible to insulate Linc from any anti-resources decisions likely to be made by the Queensland government;

For those who do not follow Qld politics the following quote from City Beat in todays Courier-mail may be of interest;

With Labor's prime vote slumping over the past year it is clear that Anna 'Pinocchio' Bligh will need green preferences to win the next election.

This is not the news that fills the resources sector with confidence.

Already there is discontent with decisions on royalties, oil shale and Waratah Coal.

With green preferences so vital the resources sector can expect a raft of decisions that will pander to the Green and the environment sector.

The real concern is that the business sector seems to have few advocates in Cabinet. The Mines and Energy minister Geoff Wilson is considered a one-person sovereign risk by the resources sector.

joestjack · 25 September 2008

nice share spike towards the end of the day. where'd that come from?

wonder if some good news has started to trickle out on the pilot plant?

...hope so.

grace · 25 September 2008

joestjack said:
nice share spike towards the end of the day. where'd that come from?

wonder if some good news has started to trickle out on the pilot plant?

...hope so.

I was out at Linc earlier this week. All quiet on the home front there. I'm actually wondering whether it has all been proven, just waiting for the exact time to announce.

The locals tell me that a very big party tent has been hired by Linc....but that's a secret per the locals.....of course I told them I would keep it just to myself....

As always, noone should rely on this to make an investment decision! This information could be, and probably is, totally wrong....

joestjack · 25 September 2008

grace said:
I was out at Linc earlier this week. All quiet on the home front there. I'm actually wondering whether it has all been proven, just waiting for the exact time to announce.

The locals tell me that a very big party tent has been hired by Linc....but that's a secret per the locals.....of course I told them I would keep it just to myself....

As always, noone should rely on this to make an investment decision! This information could be, and probably is, totally wrong....

a big party tent eh?

I think you're right - they're just waiting for the best time to announce it. PB's probably been filling up his Landcruiser at the Linc bowser for weeks.

Are you directly associated with Linc, Grace? You seem to have your finger on the pulse?

Santoro · 26 September 2008

As at 30 June officially, we were still finalising the last of the details of the relevant piping and commissioning of various items on
the Gas to Liquids (GTL) demonstration plant. But now just a few weeks later and at the time of my writing, we are on the verge
of successfully commissioning the GTL plant and just days from producing liquids. I can tell you it will be a very proud day for all
of us when I pump the first litre of diesel from the Linc Energy bowser!

From the annual report released 12 September.....its been two weeks since this was released, surely the announcement is due out any hour now....

Santoro · 26 September 2008

Linc Energy to start diesel plant within days.....Published 4:03 PM, 24 Sep 2008

Business Spectator

"We just need two to three days to work on a couple of focus points and then we will be producing liquids," Mr Bond said a telephone interview from Brisbane.

0239666 · 26 September 2008

Whats the story with the merger with SASPEX?

http://www.abnnewswire.net/press/en/57410/SAPEX_Limited_ASX:SXP_Shareholders_Vote_

Will this cause the SP to drop. I might sell at this high and buy back when it comes down.

Calliope · 26 September 2008

0239666 said:
Whats the story with the merger with SASPEX?

http://www.abnnewswire.net/press/en/57410/SAPEX_Limited_ASX:SXP_Shareholders_Vote_

Will this cause the SP to drop. I might sell at this high and buy back when it comes down.

Instead of asking silly questions why don't you do some research? That's what serious investors do.

Mickel · 26 September 2008

grace said:
Just looking back at some valuations here from BBY.

DCF at $65/barrel is $5.50. HOWEVER, this is with 70% debt, 30% equity through capital raising. WE DON'T HAVE TO DO THAT NOW.

So, we can assume some new valuations with some substancially higher price targets over the next 12 months. For a start, we will have $3.75 PER SHARE IN CASH! (ie $1.5bill/400 mill shares).

Can we just add $3.75 to $5.50 (base case at $65/barrel)
New target $9.25 (based on new tangible assets).

AND, if we use oil at US$100/barrel
DCF $9.03 + $3.75 cash per share
$12.78 share

Just throwing a few figures around. Can expect new broker targets out fairly soon I would think.

Plenty of growth in this one yet using my calculations!

Hi Grace

Updating some calculations from BBY's latest report of 8 Sept. They have used an exchange of .80 USD and an oil price of USD 75. With no debt/Equity funding required this translates to an EBITDA of AUD629 million . With tax at 30% it would equate to a net profit of $440 million or EPS of $1.10 .

The report also states the proposed sale of the Teresa coal tenements would attract a tax of $300 million (explanation given) leaving a net $1.2billion or $3 per share. BBY's DCF valuation is $7.43/sh using 13%.

http://www.lincenergy.com.au/pdf/analyst-17.pdf

Given that the diesel is about to flow a DCF of 10% would seem appropiate as there will be much less risk for the company.

Grace, would you be kind enough to do a valuation with the above figures except oil at both USD 90 and 100. Perhaps you could also explain the calculations.

Of course the above doesn't take into account the sale of the other coking coal deposit that PB mentioned in an interview on Wed 24 Sept and referred to in previous posts on this thread. That could be anything but would probably attract the full company rate of tax (30%) as Linc would have used up all their deductions on the first sale.

IMHO I think the share price will be $10 by Christmas.

Correcting a previous post - from Linc Energy 08 Annual Report PB controls 54.54% of the company through Newtron Pty Ltd not 60+ % as stated.

Disclosure- I hold a sizable parcel of LNC

bluekat · 27 September 2008

Interesting target price by Christmas Mickel !.
My thoughts. There is so much more news to come.
The commissioning is a done deal.

However what interests me most is the mention of another asset sale.
My take on that, is the news could get much bigger than a commercial plant of 20,000bpd. Maybe Linc in three years time could be involved in a few partnerships that nets the company, 70,000 bpd worth of profits.
Share price ?.

Mickel · 27 September 2008

bluekat said:
Interesting target price by Christmas Mickel !.
My thoughts. There is so much more news to come.
The commissioning is a done deal.

However what interests me most is the mention of another asset sale.
My take on that, is the news could get much bigger than a commercial plant of 20,000bpd. Maybe Linc in three years time could be involved in a few partnerships that nets the company, 70,000 bpd worth of profits.
Share price ?.

Hi bluekat
I see from an earlier post you sold out on 5 Sept at $4.25. Did you manage to get back in under $4 ?

I also think the commissioning is a done deal that's why I suggested a DCF valuation at 10% rather than 13% is more appropriate.

I think that in 3 years time Linc will have plants, at least in the construction stage, capable of producing a minimum of 70,000 bpd regardless of the size of this 2nd asset sale. Prime sites would be Sth Aust, China and US. China and possibly US would be joint ventures so only half of those profits.

I see significant re-rating of the share price (apart from next week, hopefully)
when-
1. Sale price of this 2nd asset sale is announced (before Christmas ?)
2. Approval to build 1st commercial plant is given
3. Oil starts flowing from the commercial plant

All of these 3 are planned to occur within your 3 year time frame, and, as I said, I think other plants will be in construction phase at least. PB doesn't muck around and the world will still be clamoring for reliable sources of oil.

Share price ? Who knows ! There are many variables, but I would think $20 could be a conservative base.

LittleMak · 27 September 2008

bluekat said:
Also maybe

Linc is Bond,s dream, I think he owns 62%.( correct me if i'm wrong )

Major shareholder in CNX is Incitex Pivot, hence their direction, Pivot keep a low profile at best, CNX tends to mirror that profile.

Without trying to get into a Jousting match:

Major Shareholder in CNX is the CSIRO.

There's no doubt that PB (like the old Alan Bond) is an entrepuneur and attracts some great investors. As long as its not all a sales pitch and this company and investors end up like Firepower?

Goodluck to the UCG.

LM

bluekat · 28 September 2008

Mickel, yes I was lucky enough to get back in below $4, I have been lucky with Linc, buying in on the lows and selling on the highs over the last four months, but I think after next week those days are gone.

Linc is now 100% of my portfolio, stupid I know, but then again maybe not.
Time will tell!.

I agree with all those probable sites, plus India and Vietnam. I think China could be producing before Australia, they will fast track construction, not sure, but likely.

LNC - Linc Energy

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