LNC - Linc Energy

[Jonathan111]

In comparison with New Saraji coal assets (700m tons) bought by BHP in 2.45B last year, total three coal resource of LNC is more enormous (emerald:852m,Galilee:5.0-5.5b ,Pentland:266m). So do you think what the reasonable price of three assets are? Maybe $5b is a option.

I think the sale of Pentland and Emerald will be around: (taking into account the price of coal did spike last year,when 1.5b was offfered and the price of coal has now settled, but is expected to rise next year)

conservative estimates

Pentland $0.80 per tonne x 266m tonnes = 212 million
Emerald $1.175 per tonne x 852m tonnes = 1.00 billion
___________________________________ 1.212 b

Galilee $0.38 per tonne x 1.75b tonnes = 665 million

Galilee will increase with time (further drillling and railway developments and port)

Galilee Basin coal could be sent to Abbot Point coal terminal which is being expanded from 25 mtpa to 50 mtpa or the proposed new port at Dudgeon Point just south of Mackay which could facilitate 120 mtpa. Link provided.

http://www.dailymercury.com.au/story/2009/09/19/dudgeon-point-plans-giant-coal-port-120m-tonnes/#


However if the felix price is anything to go off then the above figures are conservative??

Take a look at the independent valuation for Felix's coal assets for a for a rough comparison.

Felix has 80% of Moolarben which is an open cut/underground thermal coal development in the Hunter Valley. The combined resource is 700 million tonnes. The independent valuation for Moolarben is $1.7 billion.

$1.7 billion for 700 million tonnes of thermal coal.

Teresa is a thermal/coke coal deposit which as of 28 November 2008 had an inferred 852 million tonnes.

It must be said that Moolarbens resource is mostly in the measured/indicated category and is obviously much further advanced than Teresa but Teresa has the added benefit of approx 200 million tonnes of coking coal.

Much of the open cut resource at Teresa should now be in the measured category but ever since the coal sale process began the market hasn't been informed of further results from drilling.

Linc also have Pentland for sale. Pentland has 266 million tonnes of thermal coal with 176 million tonnes being in the indicated category with 90 million tonnes inferred.

Galilee is also for sale which is targeting approx 2 billion tonnes of open cut thermal coal.

So the valuation of Felix's producing and non producing coal assets are interesting and could be used as a rough guide to the potential realised value of Linc's coal assets. As usual there are many variables that will be factored into any valuation and perceived paralels may be misleading.

Aside from Moolarben there aren't too many growth assets that Yanzhou have in OZ that they could add value to, then wrap up in a new vehicle and be flogged off to the public.

I do think that Teresa could add value and replace/compliment Minerva and Athena which are also near Emerald and Lincs Teresa deposit. It's a bit hard to say whether or not they would be interested in Galilee and Pentland.

Peabody has been brought to all of our attention and they could find Galilee and Pentland worth looking at. Currently Peabody produces coking coal in Queensland and exports it out of Mackay. They have no exposure to thermal coal in Queensland but they do have a modest exposure to thermal coal from their mines in NSW with much of it being used in local power stations. With Galilee coal very likely to be exported out of Mackay it could be a good fit.

Peabody don't have any large scale projects in OZ. Galilee would give them this and Pentland is complimentary to it. Teresa is a potentially large scale project that they may be interested in also but Yanzhou could be more interested and trump them. See the link to Peabody,

http://www.peabodyenergy.com.au/sitesgeneral/australian-operations.html

 

[laperouselad]

Waiting... waiting...

I understand Mr Bond is in USA for next 4-6 weeks. I doubt they will announce a coal sale until he returns.....

 

[Nero64]

I understand Mr Bond is in USA for next 4-6 weeks. I doubt they will announce a coal sale until he returns

Maybe he has gone to St Louis to talk to the Peabody Energy Management team about selling some coal mines.

 

[SUNYA2006]

Maybe he has gone to St Louis to talk to the Peabody Energy Management team about selling some coal mines.

I doubt the credit of PB because such things had happened for several times in a year. Does he has real intent to sell coal asset to add company value or it is only a lies? Look at the recent stock price I think most of investors are becoming not to believe what he has said.

 

[Jonathan111]

I understand Mr Bond is in USA for next 4-6 weeks. I doubt they will announce a coal sale until he returns.....

How do you know he is the USA?


RIO just sold 398 million tonnes Maules Creek of open cut thermal coal for 480million..

Felix 700 million tonnes open cut/underground thermal coal valued at 1.7billion..

 

[basilio]

Have to say the final price of 1.40.5 is unnerving for LNC. Also the fact that 650,000 shares were dumped either on close or after close which drove the price down the last 3 cents after a pretty dismal day and week.

Any thoughts out there on why

 

[Jonathan111]

coal stocks world wide have taken a breather and so have most markets..
disappointment with the time line of expectations..
stops being hit driving price down further..
shortselling..

 

[TheAbyss]

Have to say the final price of 1.40.5 is unnerving for LNC. Also the fact that 650,000 shares were dumped either on close or after close which drove the price down the last 3 cents after a pretty dismal day and week.

Any thoughts out there on why

I am thinking they are ruing their decision to sell now.

Up 11% so far today on the back of a pretty decent resource find in South Australia. Have to say i am more appreciative of this sort of positive news than news of asset sell offs which are one off only.

This could be a company maker imo. BRR interview is compelling. 20,000 barrels of product a day for 80-90 years is what they have so far (with a lot more drilling etc to take place). Listen to Peter Bond and even if you can attribute half of what he has to say as feasible then they are off.

http://www.brr.com.au/event/62401/partner/theaustralian

Update on South Australian UCG Program

• Linc Energy discovers a significant 1.0 to 1.3 billion tonne Coal exploration target1 in accordance with the JORC Code at Orroroo

• UCG to GTL commercial location now confirmed at Orroroo, near Port Augusta in South Australia

The coal deposit is at an ideal depth for Underground Coal Gasification (UCG) and initial analysis confirms that the coal properties and the geology of the overlying strata are all well suited to host a world-scale UCG project. Linc Energy believes that this is the best UCG location and coal deposit that it has drilled or examined to date.

The significant size of the deposit, the seam thickness, the flat topography and the other attributes described above can ensure that the Orroroo location in South Australia will become the western world’s first commercial UCG facility and the focus of Linc Energy’s commercialisation of UCG to GTL
(Gas to Liquids) over the coming months and years.

 

[basilio]

Well it was great getting that Linc report out today. Certainly put a bit of support under the share price as well as reminding us just why we are here in the first place.

Am I being too cynical to ask just why the report popped out this morning? Yes it's all good but does it seem like a quick way to support a flagging share price?

I'm sure we are all aware that any new 20,000 bpd plant is going to cost around $1 bill to construct. And that we have now been waiting over 12 months for the successful conclusion of a coal sale that will finance this project. (If it doesn't come through just what is Plan B ?).

And that the last 5 week timetable is being uncomfortably stretched. (On the 18th September Peter Bond said up to 5 weeks before a resolution...)

Anyway the coal is always in the ground and hopefully is always worth a big figure..

 

[basilio]

Listened to the BRR interview with Peter Bond and it certainly was compelling. Anyone have a crystal ball that can tell us when the taps will be turned on ?

I have to say if I was a State Government like South Australia with some pretty shaky economic circumstances (collapsing car industries, real water problems) the Peter Bond picture would look really good. Perhaps they are the plan B ?

 

[springhill]

The significant size of the deposit, the seam thickness, the flat topography and the other attributes described above can ensure that the Orroroo location in South Australia will become the western world’s first commercial UCG facility and the focus of Linc Energy’s commercialisation of UCG to GTL
(Gas to Liquids) over the coming months and years.

Correct me if i'm wrong here, but they've only just defined the resource..... i'm sure CNX would have something to say about this

 

[Mickel]

I understand Mr Bond is in USA for next 4-6 weeks. I doubt they will announce a coal sale until he returns.....

I doubt that PB will be in the USA for 4-6 weeks as the AGM (in Brisbane) is on Thursday 26 November (IE LESS THAN 3 WEEKS). It would be most unusual for him not to be present, particularily if the coal tenements have not been sold.
Hopefully, they will be or, perhaps, the announcement of the sale will be made at the meeting.

The AGM starts at 3.00pm Qld time which, at 4.00pm EDST, is after the ASX market has closed for the day.

 

[Garpal Gumnut]

The chart for LNC is trading in quite a nice little range and there has been higher than normal trading over the last few months.

I enclose a weekly chart with harmonic simple moving averages 5,15,30, beloved of Dawn Bolton Smith, one of Australia's foremost chartists.

gg

 

[Mickel]

Update on South Australian UCG Program

• Linc Energy discovers a significant 1.0 to 1.3 billion tonne Coal exploration target1 in accordance with the JORC Code at Orroroo

• UCG to GTL commercial location now confirmed at Orroroo, near Port Augusta in South Australia

The coal deposit is at an ideal depth for Underground Coal Gasification (UCG) and initial analysis confirms that the coal properties and the geology of the overlying strata are all well suited to host a world-scale UCG project. Linc Energy believes that this is the best UCG location and coal deposit that it has drilled or examined to date.

The significant size of the deposit, the seam thickness, the flat topography and the other attributes described above can ensure that the Orroroo location in South Australia will become the western world’s first commercial UCG facility and the focus of Linc Energy’s commercialisation of UCG to GTL
(Gas to Liquids) over the coming months and years.

While this is promising, don't forget that it is only a target at present and any commercial production (of syngas) will be after 2010 in my opinion as -
1. JORC statement of coal resource (by early 2nd qtr of 2010).
2. Obtain any necessary approvals.
3. Selection of initial coal seams to drill and cap.
4. Test firing (burning) of coal seam and measurement of syngas volume.
5. Testing of the energy value of the syngas.

Then, it appears (from the announcement) that there will be a commercial power generation unit built on the site. From the CNX profile, a minimum 5MW generator would take at least 3 months to complete. The subsequent GTL plant would take at least 12 months to complete and depend on having the funds available.

I doubt that there will be any commercial production (of power) before July 2011. Meanwhile, Carbon Energy appears to be on target to produce power next month at Bloodwood Creek. I think Carbon Energy may claim at their AGM on 20 Nov (6 days before Linc) that they will be the first UCG producer in the western world within days.

 

[springhill]

While this is promising, don't forget that it is only a target at present and any commercial production (of syngas) will be after 2010 in my opinion as -
1. JORC statement of coal resource (by early 2nd qtr of 2010).
2. Obtain any necessary approvals.
3. Selection of initial coal seams to drill and cap.
4. Test firing (burning) of coal seam and measurement of syngas volume.
5. Testing of the energy value of the syngas.

Then, it appears (from the announcement) that there will be a commercial power generation unit built on the site. From the CNX profile, a minimum 5MW generator would take at least 3 months to complete. The subsequent GTL plant would take at least 12 months to complete and depend on having the funds available.

I doubt that there will be any commercial production (of power) before July 2011. Meanwhile, Carbon Energy appears to be on target to produce power next month at Bloodwood Creek. I think Carbon Energy may claim at their AGM on 20 Nov (6 days before Linc) that they will be the first UCG producer in the western world within days.

That is excellent analysis mate, that was quite a ludicrous statement to make, even CXY's Kingaroy project (with pre-production commissioning due to initiate in Q4 of this year) is well ahead of LNC's Orroroo..... you still a medal for 3rd at the Olympics

 

[Mickel]

Further to my last post (1051) on 7/11, Peter Bond has outlined a timeline for building power generation and GTL plants at Orroroo SA, in an interview with Dow Jones on 6 Nov (aust time). The report is on Linc's website-
http://www.lincenergy.com.au/pdf/coverage-341.pdf .

Here is an extract-
"Chief Executive Peter Bond told Dow Jones Newswires that the company wants to start building the facility late next year, with construction of the first-stage of a power generator to be completed about 12 months after late 2010, and construction of the GTL facility about 20 months after late 2010.

Bond said Linc's recent A$54.7 million institutional share placement and subsequent share purchase plan, which only raised A$7.7 million instead of a planned A$20 million, have given the company enough cash to pursue its development plans for at least another year.

Still, he said talks with various parties over the sale of its non-core Queensland coal assets are continuing.

Bond also said that companies have approached Linc about becoming joint venture partners in its South Australian operations. "We've got possible joint venture partners who want to do gasification, gas-to-liquids and power
generation," he said. Bond said the company's cash reserves mean it doesn't have a pressing need to bring in a partner. "You don't want to take on a big name just for the sake of taking on a big name," Bond said. "They can
often have opposing interests and slow down your project's development." "

And another short extract-
"The Orroroo deposit could also support 500 megawatts of power generation, Linc said. The company said it plans to drill another 30 wells at Orroroo and hopes to post a resource that is compliant with the Joint Ore Reserves Committee code in the second quarter of 2010."

So my minimum timing for production of power at Orroroo was about 6 months earlier than is outlined here. However it is not clear from the report what size of power generation is proposed. Most likely it will be much larger than the 5MW that I quoted, but I doubt that it will be the full 500MW quoted above. More likely it would be a modular plant (perhaps 50MW modules) of 100MW to 200MW initially.

Also, the proposed timing for the 20,000 bpd GTL plant is Aug 2012. This, no doubt, is dependant on having the $1 Billion + from the sale of the coal tenements available in the short term.

 

[Mickel]

I doubt that there will be any commercial production (of power) before July 2011. Meanwhile, Carbon Energy appears to be on target to produce power next month at Bloodwood Creek. I think Carbon Energy may claim at their AGM on 20 Nov (6 days before Linc) that they will be the first UCG producer in the western world within days.

My previous view above regarding CNX being the first in Aust to commercialise UCG has been confirmed by Andrew Dash, CEO of CNX in an ASX statement today. Here is an extract-

"Power station construction on track

“In July we commenced the construction of our 5MW power plant, which we
aim to have up and operational prior to the end of December, with electricity
following into the local grid by January next year.

The power station, when commissioned, will be fuelled by gas produced from
our Underground Coal Gasification (UCG) panel constructed last year and
it’s important to recognise that this will be the first power facility of its type in Australia."

 

[The Dealer]

Mickel
Got to say who cares...
Most are not in Linc for power. It is the barrels of oil. The carbon technology (linc carbon solutions). The world geographic positioning (US, China, Vietnam, Russia). The acreage. The permits. Dare I say it, the sale of non core assets.
Stop running it down. Just sell your position and go all in to Cougar.

 

[Mickel]

Mickel
Got to say who cares...
Most are not in Linc for power. It is the barrels of oil. The carbon technology (linc carbon solutions). The world geographic positioning (US, China, Vietnam, Russia). The acreage. The permits. Dare I say it, the sale of non core assets.
Stop running it down. Just sell your position and go all in to Cougar.

I'm not trying to run LNC down and will be a long term holder of the stock.

I AM trying separate "the wheat from the chaff" in the interviews PB gives to the press.

 

[qq830821]

Mickel
Got to say who cares...
Most are not in Linc for power. It is the barrels of oil. The carbon technology (linc carbon solutions). The world geographic positioning (US, China, Vietnam, Russia). The acreage. The permits. Dare I say it, the sale of non core assets.
Stop running it down. Just sell your position and go all in to Cougar.

speaking of non core assets. by the most conservative valuation i have

Emerald 852 0.54 460.08
Galilee 3000 0.2 600
Pentland 266 0.5 133
Total 1193.08
460m share on issue

share should worth 2.59 with three non core assets ONLY.....

somehow MR mkt donest agree with me and only value LNC @ 1.52....