LNC - Linc Energy

basilio · 14 October 2010

LNC's take up of the AFC option has certainly stirred the possums in the AFC camp. There is a very good overseas stock forum which discusses AFC's prospects. The fact that it has jumped around 40% in a week since announcements of a AFC fuelled power station proposal and then LNC's buy in hasn't hurt.

I've attached a relevant observation from a person who visited the AFC plant on a recent open day. .. A long read and a bit ramblay but very interesting from our point of view as partners in this technology and having the opportunity to let it loose on the power generation industry in Australia and around the world.

Cheers

..

..I asked when we can expect the order from Linc which I wasn’t expecting an answer to as it would be price sensitive. He skilfully turned it around and told the tale of how Peter Bond had started out as a truck driver driving coal between 2 mines who took a punt on the land between the 2 mines having coal under it as well. Turns out he was right and made £100 million dollars in the process! Then acquiring a majority stake in Linc Energy with the proceeds. He is a man who does not like to mess about according to Howard, one of the richest men in Australia and quite hell bent on becoming THE richest man in Australia, if LINC pans out then he may just do it.

Basically the upshot is they want 300MW of capability and they want it now! I also asked whey the alpha test cell had not been shipped to Chinchilla yet to which he replied they are waiting for the infrastructure to be put in at Lincs end. The cell is ready to be shipped they just don’t want it sitting idle in a shed in the desert. Also if any technical improvements are made at AFC’s end they can be implemented before shipping. Peter Bond has recently visited AFC and is as keen as ever to start implementing the technology asap.

It was then our turn to have a trip around the lab with GL (Gene Lewis), this is the part of the trip I enjoyed most and found the most insightful into AFC’s business. He started off by explaining who he was and what his background was. A materials engineer working with ceramics and fuel cells for 15 years. He was one of the key engineers at Ceres power for many years, when asked why he left he said it was because he thought he had taken it as far as he could and thought they would struggle to reach commercial production due to the complexity and cost of manufacturing.

After leaving on good terms he had no plans to continue work in the fuel cells field but heard about AFC by chance and after touring the facility quickly realised ‘he had been going about this the wrong way’ (Howard’s words) GL explained that whereas SOFC and PEM fuel cell tech has had millions if not billions of money poured into it by companies all over the world no-one had really looked at alkaline fuel cells since the 60’s seeing them as a dead end and defunct technology.

He explained that 10 even 5 years ago they could not do they stuff they are doing today. Advancements in manufacturing processes and low cost materials for parts and electrodes meant that what once was a very expensive field requiring capital intensive materials such as platinum was now an open field for technological advancement. Once deemed only suitable for projects where money didn’t matter (space travel), alkaline fuel cells have a new wind in their sails.

As AFC is the ONLY company worldwide to his knowledge that is currently pursuing Alkaline technology they own the book, an ‘IP land grab’ was the phrase he used. As all previous patents for this tech are now so old it meant they can basically brand it AFC and with the advancements they are making then it will be difficult for competitors to catch up, though they expect others to join the race.

The main problem with SOFC is the heat and pressure on the materials used in their construction, with the low temp AFC cell these problems don’t exist. GL was smiling as he held up a simple component made from mass producible ABS plastic and rubber o rings, which he then just pushed into a cell stack. Howard said GL’s favorite word was cheap and he wasn’t wrong.

Nearly every aspect of the afc cell is designed and made from mass producible cheap materials and uses off the shelf parts like pumps and joints. No expensive sealing and specialist parts or processes are required. The electrodes are made by screen printing, again a tried and tested manufacturing process. When he demonstrated how a cell was assembled (using an older model) it couldn’t have been simpler to assemble, very few parts made of plastic mainly. It reminded me of something you might get from a toy model shop, a 5 year old could build one!

And as if it needed to be any better a vast majority of the finished fuel cell stack is re-usable so when it does need replacing it can be reconditioned, and not only that it can be reconditioned with the latest model. Justin likened the process to taking your car in for a service, going in with a 1.4 engine and coming out with a 2 litre!

Again and again GL kept reiterating the simple nature of the construction. He also hinted at the leaps and bounds the design is coming along, making it even simpler with fewer parts and increasing the efficiency (volumetric density) of the cells. He compared the test process for new materials to that of SOFC from his days at CERES as what takes them weeks to build and approve for testing they can do in a morning thus enabling rapid advancement. He had just returned from holiday and said it had taken 4 days to get back up to speed with the developments the team had made, such is the speed they can work. The Small focussed team with no red tape and a very short turn around time for testing new ideas is allowing AFC to pull further and further into the lead with this technology.

We then were shown the test bed where 2 fuel cells sat hooked up to monitoring equipment, albeit their were no actual cells on the units it was clear to see where they went. GL explained the set up and what each of the components did and showed us the manifold ‘spine’ of the cell, which looked like a rat maze (again made from vacuum formed abs!). Here I asked him about the 50kw cell and liked what I heard, his response was ‘why 50kw?’

The original intention was to make these units produce 50kw then stack then up each finished unit been made from 4 x 12.5kw cell stacks. He then pointed out that to do that you would need individual parts for each 50kw unit ie x many pumps, x many control valves, x many filters etc. He then went onto explain the concept of the scalable cell that they now have their eyes set on, as in the diagrams of the super green power station we have seen this will consist of numerous cells (10kw according to Howard) which are stacked up in rows both horizontally and vertically, each one bolted onto the next all sharing the common parts such as electrolyte pumps and hydrogen delivery.

Thus the concept of the 50kw cell is old hat, say hello megawatts !! I’m sure the 50kw cell will have its place but this scalable power station is where the future lies for AFC in my opinion. This is where the engineering expertise of WSL and Air products will come in to make it a reality and thus make us all quite a lot of dosh in the process. A fact GL was not shy about saying. They are creating a product to make money not indulge science!

http://www.iii.co.uk/investment/det...&id=7073619&prevpost=7073532&nextpost=7073703

basilio · 15 October 2010

Boardroom radio has an interview with Peter Bond which covers the purchase of the AFC fuel cell shares and why Bond thinks this is such a big deal. Also a discussion on the use of UCG coal cavities to sequester CO2. Looks like action on AFC fuel cells within 3-6 months. Good value

http://www.brr.com.au/event/69694/partner/brr

Mickel · 15 October 2010

LNC S/P appears to be on the move upwards. About 500,000 shares traded in last 20 minutes raised the s/p from $1.86 to $1.91 after a high of $1.93.

Perhaps in response to the BRR interview with PB ????

basilio · 15 October 2010

This is a BIG push. Another surge to 1.965. Wonder if there are any new announcements coming up or has the penny dropped?

Mickel · 15 October 2010

GO LNC !!! GO LNC !!! GO LNC !!!

Another surge to $1.99 on turnover of 3 M shares to date. Currently $1.97.

I'm wondering if there is some good news coming from Alaska ????
They were due to start drilling for gas on the 7th Oct.
Any news of when they actually started drilling ???

bennib0i · 15 October 2010

$2.08! sometime is happening...

Very big uptake this late friday afternoon

noie · 15 October 2010

bennib0i said:
$2.08! sometime is happening...

Very big uptake this late friday afternoon

Its always nice to end the week making some gains

I feel i have to move LNC from the Coal sector on my board to the mixed Energy sector

The bit about today that really interests me is the 2.2 spike off a quick million trades....

awg · 15 October 2010

noie said:
Its always nice to end the week making some gains

I feel i have to move LNC from the Coal sector on my board to the mixed Energy sector

The bit about today that really interests me is the 2.2 spike off a quick million trades....

The GTL technology was what I always thought was the potential jewel for LNC, and with non-core coal and cash assets equal to (what was) the market cap,

you get all this new potential technology, and their other core assets and UCG technology thrown in for next to nothing..sounds like a good deal.

If LNC really cracks any of the technologies they are working on, SP being touted a few years back might eventuate

Yes thanks LNC for help finishing my day green on a red day for the market

Jonathan111 · 15 October 2010

Hi Teabags,

The market depth looks different now..

The shorters were blown away..

Sometimes computer generated programs manipulate the market depth.

Anything could happen

Regards,
Jonathan

teabagger · 15 October 2010

Yeah,

Thanks Jonathan, that does look better now, and with an increase in the sp I feel better too!

It's funny that a lot of you guys are all fairly well informed and able to dig up info, but so far no one knows why this sudden interest, and why no please explain?

Thanks

basilio · 15 October 2010

teabagger said:
Yeah,

Thanks Jonathan, that does look better now, and with an increase in the sp I feel better too!

It's funny that a lot of you guys are all fairly well informed and able to dig up info, but so far no one knows why this sudden interest, and why no please explain?

Thanks

I believe LNC is just so undervalued it's not funny. The market should now have confidence that there will be at least another $500m coal sale within the next 3 months. Kaching, kaching. The overseas operations particularly in Alaska suggest another mini boom. The UCG process is progressing rapidly to commercialization and the potential of the AFC hydrogen fuel cell to revolutionize cheap clean power production is world changing (and I don't believe that is overstating the case).

If you were any sort of analyst and considered what these projects alone could do for LNC you would have to jump in at the current price. And remember LNC is still way below 2008 figures when these prospects (let alone the GTL project) weren't even on the radar.

And of course that $500m coal sale may be a lot closer than we think...

Maybe a few people are doing their job.

dogeatdog · 16 October 2010

teabagger said:
Yeah,

Thanks Jonathan, that does look better now, and with an increase in the sp I feel better too!

It's funny that a lot of you guys are all fairly well informed and able to dig up info, but so far no one knows why this sudden interest, and why no please explain?

Thanks

I purchased a reasonable number of Linc shares in June this year, following advice from a good friend who has been a follower, and investor in Linc since the pre dizzy days of $5 a share.
I've watched the sp with eager anticipation almost every day since.
My own take on the current "low" sp, has a lot to do with former failed attempts to sell the non core coal tenements, to the Chinese.
Peter Bond/Linc, lost credibility with the market analysts.
Obviously the stock market crash back in 2008 didn't help.
Also the technology the company is attempting to go main stream with, has it's doubters and critics in important positions of power.
Todays 12% sp increase has caught many by surprise, as there appears to be no fundamental reason for it.
The last time the sp took off, was following a press release from Adani, which highlighted their interest in one of the coal tenements.
I guess we will see next week, if there is further news, to satisfy our curiosity.
There are so many positives that can drive the sp up in the near and medium future, providing the global economy remains on terra therma.
Any further input welcomed.
Relaxing weekend people

Jonathan111 · 16 October 2010

After hearing about the director buying on market I was very tempted to sell all my holdings in other companies and put the proceeds into Linc.

I think there is alot of interest gathering in Linc in the UK.

There has been quite a bit of consoldiation for 3 months too.

1.80 was surprising after the first coal sale..

I shudder to suggest where the share price will be if GTL and/or the Fuel Cells work out well for Linc.

It seems to me Peter Bond uses expert advice and makes good decisions for Linc's future. He has come a long way and i am quite confident in his leadership. The purchase of Sapex, the move to SA, Alaska the AFC deal, the coal sale contract just to name a few.

Mickel · 17 October 2010

teabagger said:
Yeah,

Thanks Jonathan, that does look better now, and with an increase in the sp I feel better too!

It's funny that a lot of you guys are all fairly well informed and able to dig up info, but so far no one knows why this sudden interest, and why no please explain?

Thanks

Hi Teabags

Regarding the absence of a "Please Explain" notice, there probably was one issued either during or after trading on Friday. The ASX will require an answer before commencement of trading on Monday. The LNC announcement will include the "speeding ticket" or "Please Explain" and their response.

I refer you to the previous one for LNC in July 2010 as an example of this-

http://www.asx.com.au/asxpdf/20100722/pdf/31rfyp02hhp790.pdf

Mickel · 17 October 2010

Mr Z said:
Linc looks like it is in a normal consolidation to me. Downside looks minimal, say $1.70 area and over $1.95 looks like blue sky until $2.50 odd. Some resistance around $2.20 but we should do the high end of the 2.20-50 area IMO FWIW.

Well done Mr Z!!! Your analysis on 15 Sept appears to be on the money so far. I hope the last part (ie $2.20- $2.50) eventuates in the short term.

Mickel · 18 October 2010

MORE ACTION IN THE GALILEE BASIN-

Hancock Coal

Queensland’s Galilee Basin is turning out to be a hotbed of activity in the coal sector with reports that Australia’s richest woman Gina Rinehart is in talks to sell a stake of her coal business, Hancock Coal, in a deal potentially worth up to $2 billion. According to The Australian Financial Review, Hancock Coal, which has been in talks with interested parties over the sale of its Alpha and Kevin’s corner projects for the last couple of months, has received several bids from potential international suitors. The Galilee Basin shot into limelight a few months ago with India’s Adani Group sealing a $2.7 billion deal with Linc Energy and it looks likes Indian players are again leading the list of likely contenders. While Adani may itself be eyeing a bigger chunk of the coal in the basin, the list could include the likes of Reliance Industries, Essar, NPTC and Coal India, which is set to kick-start its $US3.5 billion IPO today. According to the AFR, Hancock has had talks with Coal India with regards to the projects and the cashed up Indian coal giant could be in the picture here. Chinese interest could come from Shenhua Group and Coal China, while US-based Peabody and Brazil’s Vale may also be in the mix, the paper added.

http://www.businessspectator.com.au...n-pd20101018-ABRDS?OpenDocument&src=eaih&ir=3

I hope this interest in Gina's coal tenements is not adversely affecting LNC's efforts to sell the Teresa tenement.

profitmann · 18 October 2010

Mickel said:
MORE ACTION IN THE GALILEE BASIN-

Hancock Coal

Queensland’s Galilee Basin is turning out to be a hotbed of activity in the coal sector with reports that Australia’s richest woman Gina Rinehart is in talks to sell a stake of her coal business, Hancock Coal, in a deal potentially worth up to $2 billion. According to The Australian Financial Review, Hancock Coal, which has been in talks with interested parties over the sale of its Alpha and Kevin’s corner projects for the last couple of months, has received several bids from potential international suitors. The Galilee Basin shot into limelight a few months ago with India’s Adani Group sealing a $2.7 billion deal with Linc Energy and it looks likes Indian players are again leading the list of likely contenders. While Adani may itself be eyeing a bigger chunk of the coal in the basin, the list could include the likes of Reliance Industries, Essar, NPTC and Coal India, which is set to kick-start its $US3.5 billion IPO today. According to the AFR, Hancock has had talks with Coal India with regards to the projects and the cashed up Indian coal giant could be in the picture here. Chinese interest could come from Shenhua Group and Coal China, while US-based Peabody and Brazil’s Vale may also be in the mix, the paper added.

http://www.businessspectator.com.au...n-pd20101018-ABRDS?OpenDocument&src=eaih&ir=3

I hope this interest in Gina's coal tenements is not adversely affecting LNC's efforts to sell the Teresa tenement.

The Infrastructure (ie Rail) for all this coal to become a mining reality is a long way off IMO. Watch for the Qld Government annoucment on where it is going to spend its windfall gain post the float of QR. My mail is that it won`t be on Rail Infrastructure!! You heard it here first!!

luckypaul · 19 October 2010

More on Adani including their interest in UCG. That may either be following the agreement already made with Linc or additional stuff we have yet to hear about. They certainly do not seem scared of spending large amounts of cash...

10/18/2010 16:33:26 - CORRECT: Adani Enterprises To Invest A$6.9 Bln In Australia Coal Project
By Eric Yep

Of DOW JONES NEWSWIRES

MUMBAI (Dow Jones)--Adani Enterprises Ltd. (512599.BY) said Monday it will invest A$6.9 billion in Australia to develop the company's coal mines and related infrastructure in the state of Queensland.

The investment, one of the largest by an Indian company in the island continent, comes after a similar investment by Adani Enterprises in coal and transportation assets in Indonesia as Indian coal and power producers increasingly look overseas to secure energy resources.

India's power producers, to meet rapid industrialization and urbanization, are adding thousands of megawatts of generation capacity, most of which is dependant on coal for fuel. According to government think tank Planning Commission, coal will be needed to meet more than 50% of India's primary energy requirements by fiscal 2032.

Adani Enterprises, a unit of the diversified Adani group, said it will develop the Galilee basin coal mine as well as rail and port projects in Queensland. It had bought the thermal coal property from Linc Energy Ltd. (LNC.AU) in August for A$500 million plus royalties.

The company didn't give any timetable for the investment, which Executive Chairman Gautam Adani in a statement said will be "the largest ever Indian investment in Australia."

Adani Enterprises plans to begin production from the Galilee coal mine by the end of 2014 and achieve output of between 50 million and 60 million metric tons a year by 2022, he added.

Queensland's premier, Anna Bligh, said the Galilee tenement, which is being renamed Carmichael tenement, will become the largest operating coal mines in Australia and one of the largest in the world when it reaches peak production.

Adani Enterprises, which operates businesses such as power generation, ports, coal mining and logistics, also opened its Brisbane office Monday.

The company plans to have annual coal mining capacity of 200 million tons, power generation capacity of 20,000 MW and the ability to transport 200 million tons of cargo through its ports by 2020.

In August, the company said it agreed to set up a dedicated rail and port project with a provincial government in Indonesia and state-run coal miner PT Bukit Asam, one of the largest coal producers in Indonesia and the owner of the country's second-largest coal reserves.

In return, Adani Enterprises got the rights to buy as much as 60% of the coal from PT Bukit Asam and the permission to use its infrastructure to move at least 35 million tons of coal a year. The Indian company had also agreed to set up a 350-kilometer rail line, which can transport 60 million tons of coal a year, and a port of similar capacity.

In Australia, Adani Enterprises said it would explore opportunities for downstream operations in the coal sector. It said it will also look at underground coal-gasification and coal-to-liquid technologies.

-By Eric Yep, Dow Jones Newswires; 91-22-6145-6110; eric.yep@dowjones.com

Click here to go to Dow Jones NewsPlus, a web front page of today's most important business and market news, analysis and commentary: http://www.djnewsplus.com/access/al?rnd=ZAztfERskB87p5Nmmx/WSA==. You can use this link on the day this article is published and the following day.

(END) Dow Jones Newswires

October 18, 2010 10:33 ET (14:33 GMT)

© 2010 Dow Jones & Company, Inc.

dogeatdog · 21 October 2010

Hopefully this type of article from "The Australian", wont have a major impact on the Linc sp

A KOREAN gas company has signed a coal seam gas research deal with the University of Queensland.
Under the five-year agreement, the university and Korea Gas Corporation (KOGAS) will collaborate on research and training.

The deal comes amid calls to suspend the coal seam gas industry following a spate of contamination incidents at Queensland operations.

Yesterday, cancer-causing chemicals were found in eight exploration wells at a central Queensland coal seam gas operation.

Four toxic chemicals benzene, toluene, ethylbenzene and xylene (BTEX) were discovered in the hydraulic fractured wells in the Surat Basin, near Miles, Origin and its Australia Pacific liquefied natural gas (Australia Pacific LNG) joint venture partner ConocoPhillips have revealed.

In mid-July, the Queensland government suspended Cougar Energy's underground coal gasification project near Kingaroy, in the state's southeast, after underground water was contaminated with benzene and toluene.

basilio · 21 October 2010

Well one quick spurt into the $2.20s to tempt our confidence -- and then back to the doldrums. Disappointing.

I think the reality is that most market sentiment at the moment is negative. There are many overriding fear factors in play which mean that almost all the payers are taking profits as quickly as they can. I suppose in this climate that means that a company will really have to earn its supposed share value with results, profits and dividends rather than speculation - unless it's a one day wonder.

In the bigger picture I think this will play havoc with the super and pension funds which must be going absolutely nowhere. And with many baby boomer finally retiring one could see these funds having to sell shares to pay benefits..

LNC - Linc Energy

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