WMC - Wiluna Mining Corporation

you can expect news on what they intend to do with it in the next couple of weeks - they were getting a report ready for the June quarter. Given the size of the resource and with oil and coal prices soaring I would be mighty surprised if the economics weren't pretty good.

Broadside said:

you can expect news on what they intend to do with it in the next couple of weeks - they were getting a report ready for the June quarter. Given the size of the resource and with oil and coal prices soaring I would be mighty surprised if the economics weren't pretty good.

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G'day Broadside,

I've been watching this since the Russian coal thing was outbid, the two financial guys on the board have shown they can string a deal together (one also ex-Bannerman so not shy of OS) once i saw the cheerleaders swing into action after GLX's preso' last week that was enough for me to join the fray.

The Ian Middlemas fraca's last year with the accompanying dilutive affect was enough to keep me away from GLX yet enough to whet my appetite for Blackham.

Far lower MC,more cash, big JORC,news due, railway and port 30 minutes away.

Was actually waiting for YT to post on it:

The weekly chart was also aching to close the gap imo and we're nearly there after today.

Pleasant surprise

BLK closed up 12% to 46c today.
It seems that many people are anticipating this upcoming report / announcement.

Jimmy I think it is just general speculation at this stage, coupled with an increase in the oil price from 126US$ to 130US$ today, which of course makes oil alternatives more desirable.

The key to Blk being worth more than its current price is:

1. a suitable exploration and development plan with its JV partner;
2. the resources being proven as suitable for UCG / C2L by a well regarded expert (there are varying qualities, of coal and expert!);
3. there being a suitable technology provider found;
4. there being a funding stream for the burn and conversion plant.

Their modus is to contract assistance, rather than have it in house, thus whether the co. is worth substantially more will depend on the quality and cost of that assistance and the results of proposed analysis report. In short, and to refer to the lanugage of a previous poster, the ability to string a deal together, but the right deal (Russia wasn't quite right at the time).

Others, eg LNC, MEE and CXY, are substantially more advanced in term of project, staff, experience in house etc. Blk's advantage MAY be its resources (the same goes for Glx of which I am not a fan), but of course many traditional coal producers have vast resources. In othe words, it has a licence with good potential, but that does not sufficiently differentiate it.

I wait on the sidelines with a mild interest.

Having done some research, I do think that this company is grossly undervalued. It's most recent announcment has it with a net 632MT of coal, sufficient to produce (apparently) in excess of 300 million barrels of oil.

Its JV in the Scadden project, Wesfarmers, is a major company, with the ability to nuture the coal to liquids project to fruition. It has equal, IMO, potential to UCG companies.

Surprisingly, its current market cap is only Au$15mil, a minnow compared to even the Mee and Cxy at their current level. It can rerate many times to achieve their level, and I see today has increased 31% to approximatly .60, but is still along way off its high of 1.40. It seems to have been punished harshly by the Opes fiasco and the Russian lack of success.

Its MD is competent, it now, I understand has a marketing person, and I understand it prefers against a share dilution type approach to capital (I am sure that may be necessary, but Wesfarmers could assist).

I disclose holdings.

Well a big day. Closed at .60, so up 33%. It can only benefit from the UGC and CSM interest I suspect.

james99 said:

Well a big day. Closed at .60, so up 33%. It can only benefit from the UGC and CSM interest I suspect.

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Yep it has taken off

thx

MS

KEY POINTS
• Option Agreement to acquire lignite project in WA.
• JORC In Situ Inferred Resources 164 million tonnes
• Significant potential exists to increase the resource size
• Zanthus seam a feedstock for oil production
• Average seam thickness 10 to 13 meters

Good support for coal to liquid (what BLK proposes) from Ferguson, the Resources Minister.

http://business.smh.com.au/ferguson-...0605-2ma8.html

Well I think that Tuesday will be a good / great day (subject to Monday on the DOW; but I do not think it matters if it goes down, so long as oil futures hold above 130 ish.) Although the DOW is down substantially, oil and energy cos have held up and advanced on the TSX, which Au. resource stocks tend to mirror.

When oil when to $136 bl, cxy, mpo, mee, blk and glx spiked, it is now $139, and furthermore there has been positive publicity in Au re gas. Gas in US now $12+ and it is predicted that Au will trend in that direction. Of some of the smaller ones (v.v. crude analysis and on head shares only):

-Mee, expertise, further advanced, and with some gold / uranium interests, market cap 230 mil.
-Cxy, expertise and to make a financing announcment Tuesday, cap 105 mil.
- Blk, not yet announced specific plans but JORC resources already, and shown an ability to raise finance (eg 50mil Russian project), cap 16 mil.

Blk can incease 6 times to equal Cxy, and 14 times to equal Mee. And that is not necessarily unrealistic. Mee and Cxy were, until very recently, much smaller cap companies. It seems re-rating can occur very quickly in this sector and climate.

As I understand it, ACDS Natural Resources Fund has a signficant holding(see link): http://www.citywire.co.uk:80/adviser/fund-performance/fund-factsheet.aspx?FundID=97865

In terms of investor sentiment, the trend is up and these small caps will, IMO, also be dragged up by AOE, BPT etc over time. The turning point may be if some cannot bring their projects to fruition, but there are many months before that possibility comes to bear (ie before actual construction begins. That, IMO, will be a time of risk).

In short, I am very optimistic about Blk's potential (and of course the sector generally) in the next few weeks.

I disclose holdings.

Gosh all happening for the coal to liquids sector (eg, LNC and BLK). Two quotes, first in relation to a US bill, and the second in relation to ExxonMobil's UGC process; I understand that BLK is to select the best UGC process for its coals - and there seem to be an increasing number of technologies available. With its substantial (680 MT) JORC resources and JV partner in Wesfarmers BLK must be poised to make rapid progress. I see oil stocks have continued to rise internationally, despite the downturn in other sectors. Exciting times. I disclose holdings in BLK and CXY.


Senators Introduce Bill to Increase Domestic Oil and Natural Gas Production; Coal-Derived Fuel Mandate
May 04, 2008
US Senator Pete Domenici (R-NM), ranking member of the Senate Energy and Natural Resources Committee, introduced the American Energy Production Act of 2008 (S.2958) to increase domestic production of oil and natural gas and to fund the development of oil shale and coal-to-liquids technology. Eighteen other senators co-sponsored. Included in the bill is language for a coal-derived fuels mandate.

The bill would open up the Arctic National Wildlife Refuge (ANWR) as well as the Atlantic and Pacific regions of the Outer Continental Shelf for exploration and production; and lift the one-year moratorium on developing oil shale in Colorado, Wyoming and Utah.



DKRW Selects ExxonMobil’s Methanol-to-Gasoline (MTG) Technology for Coal-to-Liquids Project
December 17, 2007

MTG is one of the pathways for converting syngas to transportation fuel. Both the Fischer-Tropsch and MTG processes are 3-step processes. Thermal efficiencies are essentially governed by the thermal efficiencies of the syngas production process and feed. Click to enlarge. Source: ExxonMobil and Uhde
DKRW Advanced Fuels (DKRW) has selected ExxonMobil Research and Engineering Company’s (EMRE) methanol-to-gasoline (MTG) technology as part of DKRW’s coal to liquids (CTL) project in Medicine Bow, WY. DKRW recently stated that it has switched the initial finished product of its planned CTL plant from diesel to gasoline. (Earlier post.)

The Medicine Bow project will gasify the coal, convert the synthetic gas to methanol, and then convert the methanol to gasoline via the MTG process. The plant will produce up to 20,000 barrels per day of transportation fuels, electricity, steam, off-gas, slag, chemicals (including sulfur), other fuels and energy products which will be sold into the market. The plant intends to capture CO2 emissions from the process and send it to northeast Wyoming for use in enhanced oil recovery projects.

Excellent article in AFR weekend edition on UGC, specifically mentioning Blackham (and Mee, Linc and Sapex). Great.

james99 said:

Excellent article in AFR weekend edition on UGC, specifically mentioning Blackham (and Mee, Linc and Sapex). Great.

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Hopefully we see a turn back up James as I took great pleasure in being second on the stockpicking comp' behind GDA (with their 900% rise)

Out of the options though as 75% was too sweet to ignore.

Jtb. I see that Texas may be pinning its return to the haydays on lignite to coal. See link for full article on process etc.


"Researchers at UTA work on turning lignite into oil

12:00 AM CDT on Sunday, June 15, 2008

Researchers at the University of Texas at Arlington think they can turn the state's 200-year reserves of lignite into a supply of heavy crude that will return Texas to its glory days as one of the oil capitals of the world.

As a result of their research, they say, the cost of heavy crude could eventually drop to around $30 a barrel. Heavy crude sells for slightly less than the light, sweet crude that is trading in the $130-a-barrel range.

Their research could also drastically reduce the cost of synthetic biodiesel fuels for diesel automobiles and trucks by reducing processing times and increasing yields with a product that's superior to diesel fuel made from petroleum.

The time frame? They say they could have biodiesel fuel available in quantity in about two years and liquid lignite converted into heavy crude in four or five years."

http://www.dallasnews.com/sharedcon...-miller_15bus.ART.State.Edition1.4db8cbf.html

james99 said:

Jtb. I see that Texas may be pinning its return to the haydays on lignite to coal. See link for full article on process etc.


"Researchers at UTA work on turning lignite into oil

12:00 AM CDT on Sunday, June 15, 2008

Researchers at the University of Texas at Arlington think they can turn the state's 200-year reserves of lignite into a supply of heavy crude that will return Texas to its glory days as one of the oil capitals of the world.

As a result of their research, they say, the cost of heavy crude could eventually drop to around $30 a barrel. Heavy crude sells for slightly less than the light, sweet crude that is trading in the $130-a-barrel range.

Their research could also drastically reduce the cost of synthetic biodiesel fuels for diesel automobiles and trucks by reducing processing times and increasing yields with a product that's superior to diesel fuel made from petroleum.

The time frame? They say they could have biodiesel fuel available in quantity in about two years and liquid lignite converted into heavy crude in four or five years."

http://www.dallasnews.com/sharedcon...-miller_15bus.ART.State.Edition1.4db8cbf.html

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Hi are there any listed companies who speciliase in selling ignite?

thx

MS

------------------

Hi Michael. I am not sure, but given that lignite is generally seen as sub-economic for export I suspect that there are not many. However, I would be interested in knowing as well. Perhaps a side play.

Annoucement out today: 700 mt JORC resource, with over 1400 drill holes, and it is a shallow and thick seam. See part extract:

The current estimate compares favourably with the previously reported resource by
Wesfarmers Premier Coal Limited of 668 million tonnes and 187 million tonnes of
coal inventory.
Exploration drilling, to find and define the lignite deposit at Scaddan, required a total
of 1,413 boreholes, 201 of which were diamond cored and 1,212 drilled as open
holes. Runge has outlined locations of additional drilling on the Indicated resource to
ensure drill hole spacing is within 500m as required under the “Guidelines for
Estimating and Reporting of Inventory Coal, Coal Resources and Coal Reserves” to
potentially upgrade the area to a Measured status. Drilling of several quality holes of
a spacing of no less than 2,000m should readily convert the Inventory area to an
Inferred resource as there is reasonable confidence in the structural continuity of the
lignite from previous drill holes.
Based on the depth and thickness of the resource the deposit would be suitable for
extraction by open cut methods as it lies at depths generally between 25 and 30
meters with an average cumulative coal thickness of 8 meters. The shallow depth
and generally unconsolidated sediments overlaying the seam makes the deposit
amenable to large scale open pit mining methods.

Quarterly report now out. In addition to the coal resource, Blk has $3.6 mil in cash, enough to proceed to the prefeasibiliy study apparently, which may be fast-tracked. See announcement:

http://www.asx.com.au/asxpdf/20080731/pdf/31bgfy09jqxbln.pdf

See new presentation released today. I suspect that this may be the report foreshadowed for broker presentations.

Its JORC value is $.01 / tonne, the lowest of those in the sector with a JORC figure by a substantial margin (accepting most of the others are more advanced).

CTL scoping study planned for August. They have been pretty good thus far with progress reports, so lets hope ....

http://www.asx.com.au/asxpdf/20080804/pdf/31bjmlfkrs988m.pdf

See latest announcment (today) Blackham progresses towards 1 billion tonnes. It now has 719 tonnes JORC and the scoping study is due soon.

And unlike some juniors in this tough market it has a strong partner, Wesfarmers.

Finally, and what a positive and comprehensive report.

• 15,000 barrels per day Coal to Liquids operation technically feasible
• Fischer-Tropsch process producing Diesel and Naphtha
• Production of 4.8 million barrels per annum
• 762 million tonne resource gives over 70 years of feedstock
• Import replacement of petroleum products into the domestic market
• Scaddan Energy Project offers substantial leverage to oil price rises

So large deposit. Cash. And JV partner. Excellent.