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Last Update: 13 February 2008 Heavy
Rain in Bowen Basin helps tighten coal market BMA, Wesfarmers, Macarthur Coal and Ensham Resources declared force majeure after the flooding in the Bowen Basin in mid January 2008. This combined with the Chinese snowstorms and South Africa’s power problems has tightened the coal market with spot thermal coal for immediate delivery reaching record highs (around US$125/tonne). Further rain during February has caused further delays to production and resulted in problems for some Queensland rail lines. Xstrata
raises bid for Resource Pacific Xstrata raised its takeover offer for Resource Pacific Holdings Limited from $2.85 per share to $3.20 cash per share. The offer closes on 22 February 2008 unless further extended. Cockatoo
Coal Limited - Acquisition of Independent Coal Pty Limited Cockatoo Coal has entered into an agreement to acquire 100% of the issued capital of Independent Coal Pty Limited for a cash consideration of $2 million. Independent Coal is the registered holder of EPCs 862, 863 (the Dingo project) and EPC1063. The EPCs border the highly-productive Rangal Coal Measures near the Central Queensland mining centre of Blackwater. The acquisition will deliver to Cockatoo Coal a 100% interest in the Dingo project. Toyota Tsusho Investment (Australia) Pty Ltd continues to have a right to earn up to a 5% participating interest in the Dingo project. Gloucester
Coal Settles Coking Coal Price Gloucester Coal has completed coking coal price negotiations with key Japanese customers for the 2007/8 Japanese financial year, resulting in an averaging closing price close to US$73/tonne (down 12%). Gloucester Coal's high ash thermal coal is predominantly contracted at over US$40/tonne for the remainder of 2007. Newcastle
Demurrage/Thermal Coal Price With queues around 50 vessels, demurrage is estimated to be over A$4 per tonne. This fact, plus increased Chinese demand and heavy rain restricting Indonesian exports, could see thermal coal settlements around US$55/tonne. “Southern Missing Link” A
consortium of five partners (Australian Transport & energy
Corridor, Queensland Rail, Industry Funds Management, Xstrata and
Anglo) are investigating a rail link between Moura and the Surat
Basin. The consortium have formally signed a mandate with the
State Government running to 2011. Initially 20 million tonnes
per annum of coal will be hauled and this may eventually increase to
40 million tonnes per annum. The
link’s future will be dependent on the planned Wiggins Island coal
terminal in Gladstone and construction of the Nathan Dam for the large
amounts of water needed for coal washing plants. The total cost of the rail line will exceed A$1 billion and the necessary funds will be raised by utilising “take or pay contracts”. BHP Billiton agrees to reduced coal price It is reported that BHP has agreed to a reduced contract price of US$102 to US$104 for premium quality coking coal. This represents a reduction of 10.5% in the price for the 2006-07 contract year. Coking coal was Australia’s largest commodity export in the 2006 financial year. Sojitz Corporation to farm-in to EPC927 Major
Japanese trading house Sojitz Corporation has signed a Memorandum of
Understanding with Northern Energy Corporation to form a joint venture
to advance the company’s Emerald project towards mine development. Sojitz
will earn a 30% joint venture interest in EPC927 by paying $0.5
million up front and sole-funding a three-stage, $5.3 million
exploration and evaluation program to take the exploration project
through to completion of a bankable feasibility study for
establishment of a mine on the tenement near Emerald in Queensland’s
Bowen Basin. Sojitz has an option to acquire a further 19%
interest by paying a further $6.65 million in cash. Exploration
is planned to commence in the first quarter of 2007. Cockatoo
Coal Issue 40 Million Shares In a statement released by its directors, Cockatoo Coal have announced it has agreed to allot 40 million shares at $0.225 per share equally amongst SK Australia Pty Ltd and Kores Australia Pty Ltd for a combined total of AUD$9 million. In addition, without any binding commitment for the sale of coal, Cockatoo has granted SK Corporation and KORES rights for marketing coal to Korea and, with mutual consent, may bring opportunities to Cockatoo Coal to sell coal to certain other regions. The transactions will strengthen Cockatoo Coal's capital base, enabling it to expand its coal project portfolio and give access to the Korean market when its projects come into production. Peabody
Acquires a 19.99% shareholding in Excel Coal Today Peabody Energy Corporation announced an increase in the price it is offering to all Excel Coal shareholders under its Scheme of Arrangements from $8.50 to $9.50 per share. Peabody's revised offer was conditional upon shareholders associated with certain Excel directors agreeing to sell Peabody shares totalling in aggregate 19.99% of the total shares in Excel, at a sale price of $9.50 per share (the same price as under the revised offer). To enable Peabody's revised offer to be available to Excel shareholders, those shareholders have agreed to sell part of their shareholdings to satisfy this condition. It is rumoured that Anglo were about to make a counter offer for Excel. Macarthur
Coal Limited On 13 September 2006 Macarthur Coal reported a Net Profit After Tax (NPAT) of A$149.6 million for the twelve months ended 30 June 2006, being a 133.2% increase on 2005 NPAT. The increase is attributable to the price of PCI coal increasing by approximately 120% for the 2006 contract year (1 April 2005 to 31 March 2006); the decision to develop the Moorvale Mine prior to the mining boom and increasing ownership in the Coppabella Mine. A final dividend of 18 cents per share fully franked was declared by Macarthur Coal, taking the total annual divided to 41 cents per share fully franked. Federal
Government Awards Major Project Facilitation status for the Sonoma
Coal Project Tick
for $300M Coal Mine by Tony Raggatt (Article from the “Townsville Bulletin” 13 July 2006) The
Federal Government yesterday backed a new coal mine near Collinsville
and about 200km south of Townsville set to inject $300 million and
hundreds of jobs into the region's economy. The
mine is expected to provide big spin-off benefits for Bowen Shire and
Townsville as Mackay struggles to service the burgeoning coal
industry. Federal
Industry Minister Ian Macfarlane announced the Sonoma Coal Project,
proposed by Brisbane-based QCoal Pty Ltd about 6km south of
Collinsville, had been awarded Major Project Facilitation status. The
status means Government agency Invest Australia will help with
approvals and work with QCoal to identify minority stake foreign
investors. Mr
Macfarlane said the status recognised the project's North Queensland
and national significance. "A
new hard coking coal mine represents a significant investment in the
Bowen region in Northern Queensland," he said. "The
project brings with it tremendous local investment, small business and
employment opportunities. "There
will be more than 200 new jobs during the construction phase of the
project and more than 100 positions created through the actual
operation of the new mine. "On
top of that, almost $300 million is expected to ripple through the
local, state and national economies in the form of supply contracts
for everything from transport, logistics services, machinery, food and
hospitality." QCoal,
a private company led by former Queensland Government geologist Chris
Wallin, is hoping to start construction of the mine early next year. An
environmental impact statement process is under way, while the mine
has attracted the opposition of conservationists. A
federal court case, brought by Wildlife Whitsunday challenging Federal
Environment Minister Ian Campbell's decision not to invoke federal
environmental assessment, was dismissed last month. The
State Government sanctioned the mine as a significant project earlier
this year and it is now full steam ahead for QCoal Pty Ltd. Mr
Wallin, QCoal managing director, said he expected the EIS to be signed
off soon and the awarding of a mining lease to start construction in
2007. The
company proposes to produce two million tonnes of coking and thermal
coal product per annum initially but has an estimated resource of
close to 100 million tonnes. The
coal will be railed about 100km to Abbot Point Bulk Coal Terminal for
export where Queensland Ports Corporation is undertaking a $430
million expansion. Mr
Wallin said the Bowen Shire and Townsville would benefit from the mine
development including the requirement for engineering services. "Townsville
is the logical place to supply those services," he said. "Mackay
is overheated so I think Townsville will see a boost from the mine as
well." Bowen
Mayor Mike Brunker said the mine would provide a big injection for the
shire and provide more reason to build the so-called 'missing link' in
the coal rail line infrastructure between Goonyella and Newlands. He
said Bowen could also expect a boost from mine workers some of whom
would choose to live at Bowen. "It
will be a good injection for the shire," Cr Brunker said. "The whole shire will get a good benefit out of it." Peabody
to acquire Excel Coal Peabody
Energy Corporation, the largest U.S. coal producer, agreed to purchase
Australia's Excel Coal Ltd for about $1.83 billion in cash to expand
in Australia's coal industry. The
offer price is $8.50 per share and the deal is expected to be
completed in mid October 2006. Excel
is Australia's third-largest coal producer by market value, ranking
behind BHP Billiton and Rio Tinto Plc. Excel, which produces coal used
for both power generation and steel production, operates three coal
mines and has interests in three other projects in Australia and
overseas. The
purchase will add 500 million tons of metallurgical and thermal coal
to Peabody’s resource base. Peabody spent US$445 million acquiring
Australian coal assets in the past four years, including mines owned
by Germany's RAG AG and Atlanta-based power generator Mirant Corp The
U.S. coal company produces 9 million tons from Queensland of mostly
metallurgical coal, used to produce steel. Excel produced 5.6 million
tons of coal last year, and its output is forecast to increase to 15
millions tons in 2007. Excel Coal recently announced it had several fixed price thermal coal sales contracts for around 7 million tonnes of coal out to December 2010. Sales price was US$51 to US$51.50 per tonne F.O.B. Newcastle and forward currency contracts result in a fixed price of approximately A$70 to A$71.45 per tonne. Xstrata
settle thermal coal price Press
reports say Xstrata has settled this year’s thermal coal price with
the Japanese power industry at US$52.50 a reduction of US$1 from last
year’s price. Australian
resource stocks in favour Citigroup analysts have upgraded a host of Australian resource stocks to “buy” on the back of strong global commodity price forecasts due to stronger global growth forecasts, supply constraints and investment buying. The focus this week is on iron ore contract price negotiations for 2006-07 between exporters and Chinese steel mills. Analysts expect a 10 to 20 percent rise. With the prospect of higher iron ore contract prices has come a brighter outlook for 2006-07 thermal coal contract prices with a rollover or slight increase a real possibility. The thermal coal spot market price has risen by 45% in the last four months to $US52 per tonne (free on board) at Newcastle, its highest in eight months. Negotiations continue with big Japanese thermal coal buyers. Elk
Valley Coal signs deals with Nippon Steel and POSCO Elk Valley Coal, a subsidiary of Fording Canadian Coal Trust, has signed 10-year agreements with Nippon Steel and POSCO for 4.85 million tonnes per annum of metallurgical coal for 2005, increasing to 6.25 Mtpa for the 2007 coal year onwards. Subsidiaries of Nippon Steel and POSCO have each contributed $US25 million for a 2.5% limited partnership interest in a new entity the Elkview Mine Limited Partnership (EMLP). EMLP has acquired the Elkview metallurgical coal mine located in south-east British Columbia from the Elk Valley Coal Partnership (a general partnership between subsidiaries of Teck Cominco and Fording) in return for a 94.99% general partnership interest. Proceeds from the Nippon Steel and POSCO investment in EMLP will be used to increase production capacity at Elkview mine to 7Mtpa up from 6Mtpa. A wholly-owned subsidiary of Elk Valley Coal will also be a general partner and manage the Elkview mine. Coal
prices deliver profits for Fording Fording
Canadian Coal Trust has announced a quarterly profit of $US123million
mainly due to high metallurgical coal prices during the June quarter. Year-to-date
net income has increased to $C189 million from $C23 million in 2004.
Fording expects results to continue to improve in the second half of
2005 as the full effect of higher coal prices is felt, sales volumes
increase and expansion plans at Cardinal River and Fording River are
completed. Fording
holds 60% of the Elk Valley Coal Partnership (world’s second largest
exporter of metallurgical coal) and expects to supply about 27 million
tonnes of coal to the international steel industry in 2005. New
Hope profits up New Hope Corporation has announced that net profit from its Australian operations is up approximately 160 percent in the 10 months to May. Intercoal
Limited offers shares Hoping to raise $3million, Queensland coal company Intercoal Limited has issued a prospectus offering the public 20c shares with free attaching options on a 1 for 2 basis expiring 2009. According to Axis Financial Group (Australia) Limited, Intercoal’s Kingaroy coal deposit has a minimum market value of between $8million to $12million. The deposit is stated to have an inferred resource of 181 million tonnes of coal only 25km from the Tarong Power Station. On listing, Intercoal will have a market capitalisation of A$15million. Publicly listed company Mettalica Minerals Ltd will retain 40% ownership and board control of Intercoal. Chinese
coal shortages loom Demand
for coal in China is predicted to reach 2.2 billion tons per annum by
2010 with demand set to outstrip supply by 330 million tons according
to Wang Xianzheng, Vice Director of the State Administration of Work
Safety at a forum on China’s energy strategy in Beijing. Last
year the Chinese economy expanded 9.5 percent and despite production
of 1.96 billion tons of coal, China’s mines could not meet demand
resulting in widespread blackouts. Wang
also said that only 1.2 billion tons was produced by mines meeting the
country’s safety standards. The pressure to meet demand has lead
some mine owners to compromise safety with many fatal mining accidents
occurring yearly. China
relies on coal for 70 percent of its energy needs and is trying to
diversify into other resources such as nuclear, solar and
hydroelectric power. Prime
raises $182million Expansion
of Queensland’s Dalrymple Bay Coal Terminal near Mackay is a step
closer after Prime Infrastructure Group (soon to be re-named Babcock
& Brown Infrastructure Limited) completed an institutional
placement of stapled securities for $182.4 million. A
second phase of the company’s $388 million capital raising program
is due by the end of May with a non-renounceable entitlement issue
priced at $1.35 per stapled security. Some
of the funds from the placement and entitlement will go towards the
$400 million first stage expansion of the coal terminal. New
coal terminal for Queensland The Central Queensland Port Authority plans to spend up to $400 million to develop a new coal terminal at Wiggins Island to the west of the RG Tanna Terminal at Gladstone. The first phase of the new terminal would handle up to 20 million tonnes per year serving expansion of the Moura, Theodore, Ensham and Curragh mines, as well as new projects such as the nearly-finished Rolleston mine, and the Monto and West Rolleston projects. The Port Authority will seek comment in the next month from mining companies on the type of blending facilities they require, then commence preparation of an environmental impact statement. Completion of the Wiggins Island coal terminal is planned for 2009. The government is also spending $230 million to increase capacity at the RG Tanna Terminal to 62 million tonnes per annum. This expansion is underwritten by contracts with mining companies that will use the new capacity. The government has also committed $25 million to study the $1 billion expansion of the Abbot Point terminal, which would include major investment by Queensland Rail in track and electrification.QCA
coal terminal decision may be unenforceable Uncertainty continues for the Dalrymple Bay Coal Terminal (DBCT) at Hay Point near Mackay even after the Queensland Competition Authority (QCA) late yesterday released its final decision on pricing and expansion of the terminal after a 20-month wait. The decision sets the final price Prime Infrastructure can charge the Bowen Basin coal companies that use the terminal at $1.72 per tonne, a decrease from the current price of $2.08. The new price is based on an asset value of $850 million and a weighted average cost of capital (WACC) of 9.02 percent, which takes into account the cost and added risk of any expansion. This is an improvement over the 8.2 percent WACC in the QCA’s draft decision last October. The Authority has warned it may be unable to legally force Prime Infrastructure to comply with the conditions of the decision. At the same time QCA chairman Darryl McDonough said the decision “ensures there are no regulatory impediments to the future expansion of the terminal”. Terminal expansion is desperately needed - at times more than 50 ships queue off Hay Point to load. The QCA noted the Prime Infrastructure access undertaking was the first submitted to the authority covering a major privately-owned export commodity terminal. The undertaking was submitted by the lessee Prime Infrastructure (DBCT) Management Pty Ltd on behalf of the owner DBCT Holdings Pty Ltd, a company owned by the State of Queensland – a type of arrangement not contemplated by the QCA Act and therefore creating potential enforceability problems. Excel
buys more of Millennium Excel Coal now holds 84.6 percent of Millennium Coal after acquiring a further 7.4 percent recently by issuing 2.16 million new shares and paying $246,342 to minority shareholders. Excel has steadily sought more of Millennium increasing it’s holdings to 77 percent last month following on from its initial purchase of 51 percent in October last year. New
coal explorer created Ex-QCT
Resources executives, Christopher Rawlings and Keith Barker, have
created a new coal exploration company called Northern Energy
Corporation (NEC) by using the re-named corporate shell of Poltech
International to fast-track its stock exchange listing and decrease
setup costs. Rawlings
(Chairman of Renison Consolidated Mines NL) and Barker, backed by
Melbourne-based Cygnet Capital have launched a $4 million Initial
Public Offer of 20 million new shares at 20 cents each in NEC before
it is listed on the Australian Stock exchange in February. Existing
NEC and Renison shareholders will have a priority entitlement. The
offer closes February 11, with the new shares available February 22. After
the offer is completed, NEC will have up to 53.6 million shares on
issue which gives it a market capitalisation of about $11 million. NEC
has its headquarters in Brisbane and is building a portfolio of coking
and thermal coal projects in northern NSW, and southern and central
Queensland. NEC’s
first operation will be an exploration program and feasibility study
at the Ashford Coal Project 60km north of Inverell in northern New
South Wales. Gold company Renison Consolidated Mines NL is selling a
50% stake in Ashford. Renison will retain 50% of the project, as well
as 19.9 % of NEC which will be gradually diluted. NEC will be able to
increase its share in Ashford by another 25% after completion of a
bankable feasibility study and expenditure of at least $1 million on
exploration. NEC
hopes to mine hard coking coal at Ashford and will use most of the $4
million raised at the Initial Public Offer to drill an area adjacent
to the former mine site. NEC’s
second project is the Elimatta thermal coal project near Wandoan in
the Surat Basin, Queensland. Metallica
Minerals to divest coal project Metallica
Minerals Ltd has signed a Letter of Intent with Internickel Ltd to
divest the Kingaroy Coal Project. The companies intend to reach a
Heads of Agreement (HOA) as soon as possible. Internickel
intends to acquire 100% of SE Qld Energy Pty Ltd, a Metallica
subsidiary, which will hold the Kingaroy Coal Project, for share
consideration valued at $6 million (based on 30 million shares at 20
cents each). Internickel
will also issue Metallica 30 million options to acquire shares in
Internickel at 20 cents exercisable on or before June 30, 2009. The Kingaroy Coal Project in Queensland’s Tarong Coal Basin contains measured and indicated resources of 180 million tonnes of thermal coal and is situated near Tarong Power Station. A
deed of royalty exists over the project whereby the tenement holder
must pay Metallica $0.40 per tonne of any coal produced. The
deal is subject to the due diligence process, shareholder approval,
capital raising and re-listing on the ASX by Internickel as well as
other regulatory consents and approvals. Cleveland-Cliffs
to offer for Portman North
American iron ore pellet producer Cleveland-Cliffs Inc, through its
wholly-owned subsidiary Cleveland-Cliffs Australia Pty Ltd, will make
an off-market cash takeover offer for all shares in Portman Limited.
Cleveland-Cliffs will also seek to acquire all Portman unlisted
options on issue. The
offer has the support of the Portman board and in the absence of a
superior offer the Portman board will recommend shareholders accept
the offer. The
offer to shareholders will be A$3.40 cash per ordinary share which
values Portman at approximately A$605 million. Cleveland-Cliffs also
plans to sign individual agreements with option holders to cancel
their options for the offer price of $A3.40 per share plus the
exercise price of the option. Changes
to Western Australian stamp duty legislation may slug Cleveland-Cliffs
with duty of approximately 5.4% or A$28.3 million. The
offer is expected to open early in February with a first closing date
late February. Austral
Coal share placement Austral
Coal today announced a discounted placement of over 30 million shares
at 48c each to existing institutional and new professional investors
despite advising last month that revenue for the current financial
year would be similar to the first half of 2004-05's loss of $9.5
million. Problems
with commissioning of its Tahmoor North coal mine in New South Wales
continue. The mine reported production of 163,999 tonnes last November
down from 237,000 tonnes in October due to equipment malfunction and
geotechnical issues with mining of one longwall panel. The
share placement price is the lowest point the stock has reached in the
last twelve months. The company’s share price today reached 63c
before falling back to 57c at midday. Thermal
coal prices to rise Australian
coal companies have negotiated thermal coal prices to Japan of
approximately $US54 per tonne, an increase of 20 percent. It
has been reported that Japanese electricity utility Chubu has agreed
to pay Rio Tinto’s Coal & Allied and Xstrata $US54 per tonne for
a million tonnes of New South Wales coal to be delivered during the
coming Japanese Financial Year (begins April 1). This price is
approximately $US1-2 per tonne higher than expected. Anglo-Mitsui
to expand Moura and Theodore Anglo
and Mitsui have announced plans to expand production from their Moura
and newly-commissioned Theodore mines by 80 percent over the next
three years to 12.7 million tonnes per annum. The
$800 million expansion will incorporate tenements adjoining Moura and
Theodore into an operation called the Dawson Complex which will
produce 7.1 mtpa of coking coal and 5.6 mtpa of thermal coal. Most of
the additional product will be exported to Japan for steel making and
electricity production. The
expansion includes two new mining areas, a new coal preparation plant,
new conveyors and rail-loading facilities. Anglo-Mitsui are also
upgrading their railway to Gladstone and their port facilities. The
Dawson Complex will be owned 51 percent by Anglo and 49 percent by
Mitsui. Other
companies planning expansions include BHP with plans to double its
annual production in the next five years from 58mtpa to 100mtpa, and
Rio Tinto approving expansion of its newly-opened Hail Creek coking
coal mine from 5.5mtpa to 8 mtpa. Chinese
industrialisation is driving intense competition for steel-making raw
materials. Both iron ore and coking coal have achieved record prices,
with US$120 - $125 per tonne recently agreed between Australian coking
coal suppliers and Japanese and Korean steel producers. Posco,
Korea’s biggest steel maker, has announced it will buy 5 percent of
two coking coal projects, Glennies Creek in the Hunter Valley, New
South Wales, and Carborough Downs in central Queensland, signing a
10-year supply deal with operator AMCI. Posco has warned customers to
expect steel price rises of up to US$47 per tonne in the March quarter
2005. World
steel production is forecast to exceed 1 billion tonnes this year
compared to 850 million tonnes in 2003, with forecasts of 1.2 billion
annually by 2010. Seaborne coking coal trade is expected to reach 270
million tonnes per annum from 180 million tonnes now. Rail
and port infrastructure constraints are the next hurdles to overcome,
with the Queensland industry claiming it is missing out on US$2
billion in sales annually. Coking
coal prices surge Japanese
steel mills (JSMs) have reluctantly accepted a hard coking coal price
of US$125 per million tonne FOB for their FY2005 contracts with BHP
Billiton-Mitsubishi Alliance (BMA). This
represents a 119% increase on hard coking coal prices of around US$57
per million tonne FOB for FY2004. The
JSM price agreement comes immediately after news that BMA had struck a
2005 coking coal price of US$125 per metric tonne with Brazillian
steel mills. The new contract prices will affect around 60 million tonnes of coal sold annually by BHP and its joint venture partners. BHP sells about 35 million tonnes of metallurgical coal worldwide each year. Record coal earnings are predicted for BHP in 2005. Excel
gets moving on Wambo Excel
has issued US$106 million of long-term senior unsecured notes to
lenders in the United States Private Placement Market. This
will allow Excel to repay $26 million in secured debt and fund
construction of a rail spur and coal-loading facilities at its Wambo
opencut mine in the Hunter Valley, New South Wales. The project is
expected to be complete by the end of 2005. Barclay
Mowlem has been chosen to construct the 15km rail spur from Mount
Thorley to Wambo with contracts for construction of coal handling and
loading facilities to be awarded soon. Other
projects to be funded by the recent issuance are expansion of the
Wambo coal processing plant, and construction of the Millennium
open-cut coking coal mine and coal preparation plant in the Bowen
Basin, Queensland. These projects are also scheduled for completion by
the end of 2005. Wambo
currently produces 4.2 million tonnes ROM coal per year with resources
of 690Mt. The company proposes to extend the opencut to produce
7.5Mtpa ROM and to extend the Wollemi drift to provide access to lower
seams. Up to 104 million tonnes of coal could be mined by longwall in
the next 20 years. CVRD
wins Mozambique coal concession Brazilian
company CVRD, with North American coal producer American Metals and
Coal International which has a 5% interest in the consortium bid, has
paid US$122.8 million for a coal concession in Mozambique. The
concession is considered the largest unexplored coal province in the
world with an estimated 2.4 billion tonnes of coking and thermal coal. CVRD
is expected to invest US$1 billion in the project consisting of the
concession payment, mine development, construction of a ship loading
terminal and social investments. CVRD
has concluded a pre-feasibility study for the project with a full
feasibility study scheduled to begin January 2005 and expected to take
24 months to complete. Felix
to acquire White Mining Limited Felix Resources Limited has signed a Memorandum of Understanding (MOU) with the shareholders of White Mining Limited, an unlisted public company, to acquire all the issued capital of WML and merge the WML and Felix operations. The deal is subject to due diligence, completion of a Share Sale Agreement and approval of the Felix shareholders. The
purchase price will be met by issuance of 820 million ordinary shares,
and 75 million each of Class A and Class B shares in Felix to WML
shareholders. At current share prices this values the deal at around
A$260 million. WML
assets include 80% of Ashton open-cut coal mine (1.6 Mtpa semi-soft
coking & thermal coal) in the Hunter Valley, New South Wales, 80%
of the Ashton underground longwall development project, the Moolarben
deposit in the Western Coalfields, New South Wales, the Harrybrandt
low volatile PCI deposit in the Bowen Basin, Queensland, as well as a
technology division that holds Ultra Clean Coal (UCC) technology
patents and owns a UCC pilot plant in the Hunter Valley. Conclusion
of the acquisition will double Felix’s annual production of saleable
coal to around 3.3 million tonnes and provide new short and
medium-term development projects. An
Explanatory Memorandum will be prepared, with the transaction put
before shareholders for approval early 2005. Government
ruling affects coal port profitability The
Queensland Competition Authority has ruled that Prime Infrastructure
can only charge $1.53 per tonne for coal companies to use the
Dalrymple Bay coal-loading facility near Mackay. Prime
had sought to raise its price from the current $2.08 per tonne to
$2.70 due to improvements to the wharf, while the six companies
operating in the Bowen Basin that use the port sought a reduction in
charges to $1.70 per tonne. News
of the QCA’s decision led to a 12.8 percent drop in Prime
Infrastructure’s share price yesterday. Yanzhou
buys Southland colliery Chinese
mining giant Yanzhou Coal has bought Southland Colliery in New South
Wales from receivers for US$23million (A$31 million). Yanzhou
plans to spend over $100 million to restore mine production to at
least 2 million tonnes of coking coal per year. Initial production is
expected in six to nine months, with full production 18 months away. Southland
was closed late last year after an underground fire caused extensive
damage. The disaster pushed owner Gympie Gold into receivership and
caused the loss of 220 jobs. It is expected that Yanzhou will appoint
local contractors to run the mine. Yanzhou
is China’s largest listed coal company, producing about 40 million
tons of coal per year. Coal
demand in China is expected to reach 1.7 billion tonnes this year up
from 1.61 billion tonnes in 2003. Coking coal prices to Japan in
2005-06 are forecast to rise 30 percent to US$74/tonne following on
from a 28 percent increase in 2004-05. Excel
to buy control of Millennium Coal New
South Wales-based mining company Excel Coal has announced an agreement
to buy 51 percent of Queensland-based Millennium Coal for over A$50
million. Excel
will buy 21 percent of Millennium from existing shareholders for A$4.6
million in cash plus the issuance of 2.5 million new Excel shares –
worth approximately A$10 million. Excel will also take a A$34 million
new issue in Millennium shares to bring its holding to 51 percent.
This could reach 55 percent if minority shareholders also sell to
Excel. Millennium
Coal, a privately-owned exploration company, is seeking to develop a
coking coal project near Moranbah in Central Queensland. The project
is expected to produce up to 2.5 million tonnes of saleable coal
yearly with production to begin perhaps as early as 2005 although a
mining lease is yet to be granted. Millennium has other exploration
permits at Foxleigh North and Middlemount as well as exploration near
Roma in Queensland’s Surat Basin. Excel
Coal listed in May this year and has posted a net profit of $25.7
million – 42 percent above its prospectus forecast. News of the
Millennium purchase has sent Excel’s share price up 25c to $4.07. Excel
expects to complete the Millennium Coal deal in the next two weeks. POSCO
invests in Foxleigh Coal Mine POSCO
has spent A$19million to purchase 15 percent of CAML Resources which
owns 60 percent of Queensland coking coal mine Foxleigh. Excel
buys Wambo Coal Mine Excel Coal Limited now owns 100% of HunterCoal Pty Ltd after completing its purchase of the remaining 25% minority interest. HunterCoal
owns 100% of the ordinary shares in Wambo Coal Pty Ltd, owner and
operator of the Wambo coal mine near Warkworth in the Hunter Valley,
New South Wales. The
deal is worth approximately A$53 million, made up of eight million new
fully-paid ordinary shares in Excel (at $3.40 per share), plus A$26
million in cash. So far A$10 million has been paid, with two $8
million payments due on 31 March 2005 and 30 September 2005
respectively. The deferred payments will attract interest at 7.5% per
annum. Minerva
Coal Project gets greenlight Following a feasibility study confirming the project’s viability, Felix Resources Limited has announced development of an opencut mine at Minerva supplying 2.5 million tonnes per annum of PCI and thermal coal. Minerva
is located 45km south of Emerald in Queensland’s Bowen Basin with
estimated reserves of 26.8 million tonnes giving an expected 11-year
mine life. Removal
of overburden is planned during the next six months with commercial
production in financial year 2006. Two products are planned – a 9.5
% ash high volatile PCI coal and a 6,600 kcal high volatile thermal
coal. Capital
cost for the project is estimated at $68 million or $27 per annual
production tonne. Average cash operating cost for the first full year
of production is estimated at A$35 per tonne of product coal (FOB
Gladstone). Minerva
is an unincorporated joint venture between Felix Resources Limited
(70%) and Sojitz Corporation (30%) with Felix managing the joint
venture and Sojitz providing its expertise in coal marketing
particularly in Japan. Target markets will be Japan, Korea, Taiwan,
India, the Philippines and China. The
joint venturers also hold an exploration permit over the adjacent
Cullin La Ringo deposit, which has the potential for both opencut and
underground development. Macarthur
Coal announces financial year results Macarthur Coal has posted a Net Profit After Tax (NPAT) of $11.7 million for the 2004 financial year, an increase of 7.7% over 2003. The
result exceeded Macarthur’s advice to the market on 2 July 2004 of
$10 to $11 million. Earnings
per share were 8.6 cents and a final dividend of 3.78 cents per share
fully franked was announced, which is in line with company policy of
paying 50% of NPAT as dividends. In
December 2003 Macarthur acquired a 23.3% interest in the Coppabella
Mine, and with unification of the Coppabella and Moorvale Joint
Ventures complete, Macarthur Coal now holds 73.3% of both mines. Coal
sales for Coppabella and Moorvale mines were 5.19 million tonnes with
Macarthur’s share of sales reaching a record 3.8 million tonnes, an
increase of 77% over the previous year. Product sales were 88% PCI
coal, 11% thermal coal and 1% Ultra Low Volatile (ULV) coal. Macarthur
Coal has set a production target for the current financial year of 4.5
million tonnes. Outlook is positive with demand for PCI strong and
predictions for more price rises. Diamond
Creek Coal Project for sale QCoal Pty Ltd has announced its intention to offer the Diamond Creek Coal Project for sale. The project will be tendered for outright purchase or the earning of a minority joint venture interest on the basis that development of the project is funded by the successful bidding team. The timetable for the process: Data Room process from 23 August to 21 October 2004. Receipt of bids for the project 22 October 2004. An Information Memorandum will be sent to each bidder team leader upon receipt of the executed Confidentiality Deed. The Memorandum provides further details about the bidding process and an overview of the Diamond Creek Coal Project. |
