LNC - Linc Energy

[basilio]

Interesting note that LNC wants to keep any UCG interest alive in Gailee. Must be some potential there.

I can see the point of the play. A big slab of immediate cash with either a strong long term cash flow or an early monetised amount. Real questions will be

1) How/where will they divy up the cash amongst their developments?
2) How much extra will come in from the other tenements
3) Will they do this again? I think it would be very tempting to try and prove up another big lump of billion dollar coal mine.

And of course it will be very,very interesting to see how the market responds in the short term and the analysts and institutions in the medium term.

 

[mexican]

Traders will be dumping for profit and the instos will be buying.

Purchasing power is the equation.

I'm in no great hurry to reweight out of LNC at this stage.

This story is starting to get really interesting now.

Spot on there Slipperz.
IMO north we should go..........wait and see where it settles. Keep a very close eye on Alaska for us please Slipperz and I am very interested in what other tenement Linc have, that they are going to put up for sale.
Teresa
Pentland
???????

 

[noie]

Spot on there Slipperz.
IMO north we should go..........wait and see where it settles. Keep a very close eye on Alaska for us please Slipperz and I am very interested in what other tenement Linc have, that they are going to put up for sale.
Teresa
Pentland
???????

Well, i do recall seeing that they were looking at another sale in 3 weeks..
and making a deal with a current buyer is always more likely then with a new buyer..
maybe this is why we have a up front and over time deal.

 

[namrog]

HMMmmm, Out of 3 billion, half a billion now and the rest over 20 years.
Initially I thought wow thats great, but on second thoughts I'm not so sure it's such a great deal, and would have much preffered say 1.5 billion total now , because of inflation etc, in 10 or 20 years, $2 a ton is not going to look like much, having said that , it's probably the best they could have done under the circumstances...

What I'd really like to see now is diesel out of the demo plant, or concrete proof that it's close to possible, so that these funds are used to further their main objective IE producing diesel from coal, though I'm not so sure that this is their no 1 objective any more, it seems to me that the company is positioning itself as more of a potential power generator these days..

All said and done, these are interesting and exciting days for lnc holders, and encouraging as it is, I'm not getting too carried away just yet..

 

[GCrenegade]

Peter Bond was just on abc discussing the deal and said that the other sales are well on the way and it was suprising who the potential buyers where. PB mentioned that Adani were not looking at these other properties and the chinese were not in the top 3 in the race. Interesting to see who it turns out to be.

 

[basilio]

On reflection I'm not sure if the whole stock market world will spin on it's axis because LNC finally sold its coal asset. Obviously we are all pretty obsessed as is Peter Bond but the rest of the troops? Perhaps not.

I believe the institutions will have to start buying shares. The smartest, quickest thinkers ( 1-2) - have probably been buying in the last 2 weeks. The next couple will probably get in early on. But I suspect the rest will simply not take much notice until their quarterly review and it becomes clear from some further price increase that they should also be there.

The analysts? Apart from one company I don't think there has been any recent serious analytical advice on LNC. In any case I havn't seen any such advice. And remember that LNC has been assiduously courting them through the Limelight series for a long time now. So why will August 4th suddenly produce a wreath of glowing reports? They will take their own good time. The technology is still young and commercially unproven.

So perhaps the initial buyers will be individual longerterm LNC shareholders who decide that with the financial security of the coal sale LNC is now a serious long term investment and that on balance it won't be getting any cheaper.

In the big picture I suggest most investors are still nervous about economic conditions as a whole. It wouldn't take much to spook the market into a serious dip. And I really couldn't see LNC somehow spared from that fate.

But LNC now has at least $500 m in the bank and the legitimate promise of $2-300 m more. There are a number of oil, gas and coal tenements looking for exploration and development. The CTG technology is pretty good to go. I suggest that simply mapping out the path and getting on with the task of becoming a clean energy superpower is all thatcan be done. The hype can be put to bed. The hard work continues.

I just won't get too surprised or disappointed if LNC doesn't go into total takeoff this week.

 

[Mickel]

HMMmmm, Out of 3 billion, half a billion now and the rest over 20 years.
Initially I thought wow thats great, but on second thoughts I'm not so sure it's such a great deal, and would have much preffered say 1.5 billion total now , because of inflation etc, in 10 or 20 years, $2 a ton is not going to look like much, having said that , it's probably the best they could have done under the circumstances...

As PB said, they have the flexibility of selling the royalty stream now for approx $1B (ie $1.5B total less $500 cash in escrow) or holding on to the royalty stream to collect another $2.5B approx over 20 years.

So the deal is for a current value of $1.5B (and they can have that amount now if they wish).

Another point is that the royalty stream is $2 per tonne indexed to the Aussie CPI, so the actual $$ over 20 years will be more.

Also it's important to point out that it is 20 years production, so whether they start production in 2014 (as planned) or later it will not change the life of the royalty.

http://www.lincenergy.com.au/pdf/asx-237.pdf

I consider the deal to be great and evidence that PB is a tough negotiator.

Whether they sell the royalty stream or not will probably depend on the price and timing of the Teresa sale as I think they wish to set up a GTL plant in the US as well as Sth Aust very quickly as will need around $2B to achieve that.

 

[bennib0i]

I consider the deal to be great and evidence that PB is a tough negotiator.

I beleive so too. Considering the enormous amount of back pressure Mr Bond has been under over the past two years to secure these sales, if one negotiator wasn't as strong and firm as Peter, one would of settled for a lower rate at a more depeserate time. Also considering that Idians are known tough negotiators, the result is more than acceptable --- Linc now has a positive bank balance and a secured form of income for the next 20 years.

 

[luckypaul]

From Linc's announcement http://www.vision6.com.au/download/files/21473/1226046/Linc%20sells%20Galilee%20Coal%20Tenement%20for%20_3%20Billion%203-08-10.pdf

“This transaction provides shareholders with a Net Present Value (NPV) of approximately
$1.5 billion, with the opportunity to earn over $3 billion in revenue over the life of the royalty.
This is undoubtedly a great result for the Company,” the Linc Energy CEO said.

Quoted NPV AUD 1,500,000,000 / 494,692,339 (Linc shares on Issue) = AUD 3.03

So $3.03 should be the new floor for the SP. With all the short and long term potential that Linc has - if this stock isn't near $7 by the end of the month I will eat my hat!

 

[noie]

From Linc's announcement http://www.vision6.com.au/download/files/21473/1226046/Linc%20sells%20Galilee%20Coal%20Tenement%20for%20_3%20Billion%203-08-10.pdf



Quoted NPV AUD 1,500,000,000 / 494,692,339 (Linc shares on Issue) = AUD 3.03

So $3.03 should be the new floor for the SP. With all the short and long term potential that Linc has - if this stock isn't near $7 by the end of the month I will eat my hat!

I agree with the $3.03 (i got $2.97) but the next move can only come after the second sales is announced.. right now we don't have all the information.
If it is smaller or a worse rate people will see it as negative news

meanwhile we still have a trade halt.

 

[noie]

Oh My Mistake.

news just in

Linc Energy Ltd (LNC) (Trading Status: PRE_NR)

bids up to 2.6

 

[bennib0i]

Quoted NPV AUD 1,500,000,000 / 494,692,339 (Linc shares on Issue) = AUD 3.03

So $3.03 should be the new floor for the SP. With all the short and long term potential that Linc has - if this stock isn't near $7 by the end of the month I will eat my hat!

I wish you were right, but $7.00 is very very very almost impossibly unlikely by the end of the month without futher sales and positive reports from their current operations.

 

[basilio]

Well we know that LNC went up almost 11% in USA overnight. Probably a reasonable indication of what should happen today.

http://www.otcqx.com/otcqx/market/quote?symbol=LNCGY&tab=0

 

[bennib0i]

Opening price at 1.92 and a quick drop to 1.80.
Not the jump everyone is hoping for, but I suspect a momentum build up during th day. Already at 3mil volumn and rising fast...

Will it surpass the $2.00 mark today???.....

 

[basilio]

Fascinating watching the course of sales on LNC. Open at $1.92. One minute later (literally) large sales going through at $1.80 !! Then up again and all over the shop.

Anyone offer an explanation ?

(One thing that is clear is that plenty of people want to take their money and get out.)

 

[skc]

Interesting response from the market. Now printed a low of $1.76.

Does anyone know what happens to the royalty stream if Adani doesn't develop the mine? That might explain the large discount to that royalty stream.

Assuming $125m each year for 20 years starting in 2014, the 20 year royalty stream represents...

- $1025m at 7.5% discount rate (around the mark they used in the announcement of 1.5B NPV)
- $800m at 10% discount rate
- $514m at 15% discount rate
- $350m at 20% discount rate

The share price now basically has a big discount rate applied to the royalty stream, plus attribute no value to further asset sales (which PB said is well advanced and has larger upfront component) or LNC's core business.

This reminded me of HGO which trade well below the cash they sold ESG for 2 months before it bolted up.

 

[basilio]

Ok, Ok Ok. I think it's time we organized a hat party. All get together with our most vibrant and tastiest hats and choice of condiments. Perhaps master chef can come up with original recipes.

Obviously we know SFA about investing in the stock market !!

 

[joestjack]

Ok, Ok Ok. I think it's time we organized a hat party. All get together with our most vibrant and tastiest hats and choice of condiments. Perhaps master chef can come up with original recipes.

Obviously we know SFA about investing in the stock market !!

I've been watching Linc all morning and it seems the trading halt was lifted before the announcement about Galilee was released to the ASX - perhaps that had something to do with the price drop? Down 8 cents as I type.

The announcement has been released to the ASX just a minute ago so see if that changes the outlook.

 

[basilio]

I've been watching Linc all morning and it seems the trading halt was lifted before the announcement about Galilee was released to the ASX - perhaps that had something to do with the price drop? Down 8 cents as I type.

The announcement has been released to the ASX just a minute ago so see if that changes the outlook

Good try joe. I think most people knew there was a successful coal sale. 6 million shares don't exchanged on a whim. But what a bollocking!! Seems like really strange stuff. I've heard of buying on rumours and selling on facts but this has to be the biggest bubble prick since the South Sea bubble. (Just a little hyperbole there.)

Let's see how the day unfolds and perhaps there are a few traders out there messing with our minds and wallets.

 

[joestjack]

Good try joe. I think most people knew there was a successful coal sale. 6 million shares don't exchanged on a whim. But what a bollocking!! Seems like really strange stuff. I've heard of buying on rumours and selling on facts but this has to be the biggest bubble prick since the South Sea bubble. (Just a little hyperbole there.)

Let's see how the day unfolds and perhaps there are a few traders out there messing with our minds and wallets.

Absolutely, the market has reacted very strangely. I expected maybe a 10 - 15% gain in Linc today - wasn't expecting it to surge to $3 or anything crazy like that - but this is madness.

With the share price factoring in the coal sale at $1 billion cash over the past 2 weeks, maybe some traders were disappointed with the lack of cash upfront? That's the only other explanation I can give.

Anyways, it's still early days so let's sit back and see what it does. It seems to have stabilised the last 20 mins or so.