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Anyone care to shed some light on why the up and up announcement has had such a negative result on the SP?
Many thanks.
Many thanks.
Hi Kelpie,
Not sure whether I am right or wrong however, from techi point of view, this share has got a very high volatility , which is called noise..
so i guess today's price action is just painful but it is just a noise
ASX ann today states the the Talbot Group (Kenneth Talbot) has become a ssubtantial shareholder in RIV with 5.97% with latest purchase at $10.05
29/05/2008 Becoming a substantial holder
http://www.asx.com.au/asx/statistics/showAnnouncementPDF.do?idsID=00846310
Mittal has been buying into Talbot's QLD coal company!
Interesting eh!!!!
Thursday, 26 June 2008
THE world needs more coking coal, a key ingredient in steelmaking, and Riversdale Mining’s Michael O’Keefe says his company’s Mozambique coal project will help meet that demand. By Kate Haycock
This week, as part of its big steelmaking material sell, BHP Billiton head of metallurgical coal Dave Murray said Mozambique had the potential to become a world-class coking coal basin to rival the Bowen Basin.
And with Indian steelmakers – who have plenty of iron ore but lack the coking coal needed to turn that ore into steel – clamouring to get a foothold in the African nation, Riversdale Mining looks to have secured a key part of what will become a major coal province.
Riversdale’s 290,000 hectares of tenements in the Southern African nation’s north are near the regional city of Tete in the Moatize area, not far from the Malawi border, and sit right on the banks of the famous Zambezi river.
Add in a joint venture with Indian giant Tata Steel with skyrocketing coking coal prices and the company’s recent ascendancy into the S&P-ASX 100 benchmark index, and its rapid share price gains is explained.
Moatize hosts Riversdale’s tenements as well as coal deposits owned by the Brazilian giant Vale, while nearby ArcelorMittal has just signed a JV over coal tenements.
However, the Government has recently clamped down on the coal rush, although Riversdale has received assurances via a letter of official support from the Mozambican Ministry of Mineral Resources.
“The Government has stopped the issuing of new coal tenements because people are coming in and picking up those tenements … and then on-selling them,” Riversdale’s O’Keefe told MiningNews.net.
“There are only two groups in Mozambique with consent to go forward, and that’s Vale and us.”
Riversdale expects to have its mining contract for the Benga license – part of its Tata JV, and representing only 2% of its landholding in Mozambique – by the final quarter of this year, arriving as the company also completes a feasibility study into the project either at end of this year or early next year.
At the same time, the company plans to spend around $A40 million in exploration over the next two years at its Moatize tenements.
“We’re proved up the Benga license, with 1.9 billion tonnes [in inferred resources], we’ll now be taking that from a resource to measured and indicated status by July of this year,” O’Keefe said.
Beyond Benga, Riversdale will be focusing much of its time and budget on exploration tenements acquired from Australia’s Aquila Resources last year. The company hopes to delineate a further 2 billion tonne resource by the middle of next year.
Riversdale owns 100% of these tenements, as opposed to its 65:35 joint venture with Tata Steel over the Benga and Tete licenses.
O’Keefe says things are progressing nicely for the company. But one contentious point for Riversdale has been the quality of its coal, which has a relatively high ash content.
Two weeks ago the company released washability test work into coal samples from Benga to clarify the quality of its potential product from a future mine, and O’Keefe said the test work did just that.
“The results showed this is a premium hard coking coal – so that means we can put a brand on it, and we can say this brand of hard coking coal is equivalent to what [others] have in hard coking coal,” O’Keefe said.
The washability work showed that Benga’s coal will produce a high-quality coking coal, despite its higher ash content.
Importantly, the strip ratios at Benga will be low, meaning mining costs will be also be lower than in comparable operations.
O’Keefe also said the ash content was only an issue when selling coal into certain markets.
“In Japan, for instance, they say, where do we put our ash? Our cement works are full, our roads are built, so we don’t want high ash. But in China and India – it’s a totally different story.”
Tata Steel has also indicated it is happy with the coal’s composition, and Tata will be the major buyer of initial mining production.
Riversdale plans to mine Benga as an openpit operation and will electrify as much as it can, using conveyors rather than trucks to keep diesel expenditure as low as possible.
The company hopes to get 20 million tonnes per annum from the project, which will produce 12Mt of coal, consisting of 6Mt hard coking coal and 6Mt thermal coal.
Within that 6Mt of thermal coal, a percentage will be export quality while the rest will go towards a mine-mouth power station Riversdale is looking at with Mozambican utility Elgas.
To ramp up to this 20Mt run-of-mine development, Riversdale will start with a 6Mtpa demonstration plant, which will also help it meet its commitment to the Mozambican Government to produce coal by 2010.
The demonstration plant will be modular, allowing extensions, and will give the company a headstart in staff training and mining operations, and allow early cash flow.
At the same time, O’Keefe said the company would also go ahead with the 20Mtpa main plant, and then could shift the modular plant to one of its other mining leases in the region.
Capital costs for Benga have yet to be finalised but O’Keefe said it could be in the realm of $US800 million.
The company already has around $A300 million in the bank cash flow from its coal mine in South Africa, and with its JV with Tata Steel O’Keefe said raising cash would not be an issue.
But Riversdale’s ambitions don’t end with Benga. The ultimate plan is to have three 20Mtpa collieries at Moatize, one on the Benga JV, and two on Riversdale’s 100%-owned tenements.
In hard coking coal, this level of production would give Riversdale a production profile in the realm of 20Mtpa, and the company wants to get to this level of production by 2016.
It is an ambitious target, but O’Keefe was not only confident of achieving that but also of a strong coal market for the foreseeable future.
“What I’m seeing is that there is enough iron ore floating around – but there’s not enough hard coking coal,” he said.
“If you look at BHP Billiton and Macquarie Bank’s numbers, they’re saying to be able to meet steelmaking demand by 2012, Australia – which has 60% of the world’s coking coal seaborne trade – needs to export 200 million tonnes of coking coal to meet steelmaking demands, and that’s just not going to happen.”
However, the company still needs to get the coal to market. While Benga is well located in terms of infrastructure like power lines, and boasts a railway development nearby, this open-access rail will only be enough to establish the company’s initial exports.
The railway is being funded by the World Bank and should have a 16-18Mtpa capacity that will be dominated by Vale and Riversdale.
With Vale planning a 12.5Mtpa operation, that doesn’t leave much extra for Riversdale’s expansion plans.
Earlier this year MiningNews.net visited Mozambique and was given a helicopter tour of the Benga tenements, which demonstrated the scale of the project and Riversdale tenements, as well as the project’s proximity to the Zambezi River.
The Zambezi is wide and sandy and runs all the way to the coast. Ultimately, O’Keefe believes barging the coal down the river is the key to a successful large-scale export operation.
“We’re completing the studies on the barging now and that will finished with the bankable feasibility studies,” he said.
“It is important we have the rail, and we’ll be using that and supporting the rail infrastructure. But it will never ever be able to take the tonnes we want to move down there.”
Meanwhile, coal magnate Ken Talbot has cropped up on Riversdale’s share register, giving he company a “tick of approval”, according to O’Keefe.
“It was interesting reading [Talbot’s comments earlier in the week] that he wants to focus on more greenfield projects and he believes there’s a huge upside, and he’s talking about Riversdale,” he added.
Whilst I dont hold RIV directly I note it has contributed well to the yield I am getting back on my Linq Resources shares.. The directors of LRF seem to think very highly of RIV potential..
Im expecting the long coal short financials trade to be bank in force later this week or next. The financial issues that the world are coming to grasp with will take 3-5 years to resolve and in the meantime, any financial rally with be short covering and a bear trap. Particularly those induced by SEC regulation.
In the meantime. Rivesdale, Felix and Macarthur will continue to fall until the sell financials trade comes back. There doesnt seem to be room for the two in these markets. The two been commodity's and financials.
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