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Real-Time news about Energybuild (London Stock Exchange): 0 recent articles
|lasata: Buy EBG as cheap way into WTN............
Western Coal shows ambitious growth plans while GlaxoSmithKline shares show a good entry point, Questor says buy.
By Garry White, Questor editor
Published: 6:00AM BST 16 Jun 2010
Here's a US stock you can really get your teeth intoQuestor says BUY
Speak to any mining analyst in the City and they will all say a similar thing about bulk commodities such as iron ore and coal. The demand and price outlook is extremely positive - much more positive than base metals.
Questor remains a bull of the coal price and Aim-listed Canadian group Western Coal has one of the best production growth prospects around.
The company plans to increase its output from 3m tonnes a year to 10m tonnes over the next four to five years. It plans to do this organically and without raising new money. It should be able to do this from cashflow.
The company has also made some strategic acquisitions in the UK. Last week, the company bought the rest of the shares it didn't own in Energybuild, which produces deep-mined anthracite coal and coal from open-pit mining in Wales at Aberpergwm. Western hopes to increase production here too.
The group also bought Aim-listed mining investment group Cambrian last year in an all-share deal.
Western's main assets are found in north-east British Columbia in Canada and West Virginia in the US. The group has a 20-year coal reserve base.
The company offers exposure to the seaborne coking coal market and the US thermal and metallurgical coal markets the price of all these products is likely to rise as the global recovery takes place.
Last year was not a great year for the company as prices for all types of coal plunged. Revenues fell 25pc to C$438.6m (£290m), which caused profits to slump by about 80pc.
Coal contract prices fell to $126 (£85) per tonne for hard coking coal and $90 per tonne for ultra-low volatile pulverised injection coal, compared with $300 and $248 respectively in the previous year.
Keith Calder, president and chief executive, expects prices will be higher in the upcoming quarter and it certainly does look like the market has reached a bottom.
Indeed, coal's share of global energy consumption rose last year to its highest level since 1970, according to BP's recently issued Statistical Review of World Energy. The report also noted that China's coal consumption last year rose by 10pc and India's by 7pc, exceeding growth in GDP. This trend is likely to continue.
Western ended last year with C$136.1m of cash and C$82.6m of debt, so the balance sheet is strong. The bulk of the debt is in the form of equipment leases.
In 2011, the group expects to produce between 3.7m and 3.9m tonnes of metallurgical coal from its Canadian operations a 75pc rise on 2010 production. It expects to increase US coal production by 70pc this year to 1.7m tonnes. This is an ambitious target, but the group believes it is achievable.
For a company that has low debt and a strong growth profile, the shares appear undervalued. They are trading on a March 2011 earnings multiple of just 5 times, falling to 4.3 in 2012.
The analyst community is unanimous in the view that the group is undervalued. Of the eight City analysts that cover the company and are monitored by Bloomberg, all of them have a buy stance and the average price target is 506.6p a share, which is some 60pc above the current share price.
The Aim listing is the company's secondary listing, with the main listing being in Toronto, where the company has a market capitalisation of C$1.6bn. The shares are a buy for their growth prospects.|
|lasata: Time for EBG to join the coal mining share price rise bonanza........|
|jonwig: Gingellenator. Are you confusing the existing £4.3m facility with the possible forthcoming fundraising of an issue of up to 130m new shares?
The £4.3m facility, if fully drawn, will cost EBG around £0.6m pa in interest, which will accrue. PBT last year was £1.9m and is forecast at £2m this year.
As at 30/10, only £0.9m had been drawn. So the size of the interest charge doesn't appear to be as material as you suggest.
The proposed 130m share issue would lead to WTN holding around 75% of the share capital (assuming they take it all), and conversion of the full £4.3m loan into equity would lead to them controlling about 78%.
None of this is particularly good news for 'outside' shareholders, which is no doubt why the share price had fallen back. But you don't need to spin a new yarn when things are as they are!!|
|jwilson1975: Current Projects and Future Plans
The company is thus now producing high quality low sulphur high calorific content anthracite coal from its underground mine and opencast projects, with steam coal from its tip washing project.
· The underground mines at Aberpergym and Treforgan, which together have a proven and probable coal reserve of 7.6 million tonnes, a further measured, indicated and inferred resource of 36.2 million tonnes and an overall in-situ resource of 112.2 million tonnes (according to the AIM admission document).
· The open cast activities on the Aberpergym and adjoining estates which have a 25 year surface lease covering 2,428 hectares (24 square kilometres) and all the mineral rights to this land. Open cast coal production on the estate is has been running at a rate of 2,000 tonnes per week and in December 2008 the company also commenced sandstone quarrying operations on the site in a JV with Gerald D. Harris Ltd which serves the dual function of generating revenue while accessing the coal seam below. There is an estimated resource of 800,000 tonnes of high quality sandstone which is ideal for use in road construction. The company is actively seeking further sites on the estate and has a positive record on the restoration and rehabilitation of old derelict sites.
· A 50/50 JV with Coal Recovery Investments (CRI) to recover and wash coal from disused coal tips. The project, which began in late 2008 and is expected to yield over 200,000 tonnes of coal over an 18 month period generated an initial profit of £63,000 for Energybuild in the six months to December 2008.
All the projects are served by excellent road and rail infrastructure, and the marketing arrangements are neatly tied up too. Energybuild has sales contracts with Aberthaw power station (60 miles away by rail) and coal distributor Evans and Reid, while it is in the last stages of negotiating a contract with Corus in Port Talbot. It also sells a small proportion of its premium coal directly to domestic customers.
Energybuild's long term objectives are to achieve accelerating growth and to create real shareholder value both through organic growth of its existing operations (with a target of achieving 265,000 tonnes by June 2009, 440,000 tonnes by June 2010 and 750,000 tonnes by June 2011), and through acquisition in additional coal reserves. Its immediate plans are to look for further investments that could improve the mining system, to renew its long term contracts and to obtain planning permission for further open cast activities.
Energybuild has a large number of bull points including:
· The high quality of its anthracite coal which is clean with low sulphur and a high calorific content.
· The size of the in-situ resources, which are one of Europe's largest anthracite deposits.
· The breadth and depth of the experience of the board and management team several of whom have deep and longstanding roots in the Welsh coalmining industry. Rhidian Davies has been involved in local mining for more than 30 years, the Chairman Colin Cooke has expertise in steel and marketing and is the director of a major supplier of conveyor belts, while non-executive director Robert Morgan has been an investor in the company since 2003 and has considerable experience in fund management and the City.
· The quality of the workforce, now 208 strong, up from 73 in the last 18 months
· The financial strength of the company which has little debt and had cash of £3.5m in the bank at December 2008.
· The relatively low capital cost of development in view of the development already undertaken by British Coal and the acquisition of Tower's equipment. Energybuild has also benefited from Coal Aid Investment Grants.
· The excellent transport connections with an 'A' road to the mine gate and a railhead at Tower colliery 6 miles away. Energybuild are investigating the possibility of a conveyor belt linking directly to a local railhead which might be built with the aid of grants from the Welsh Assembly.
· Energybuild's comprehensive marketing contracts and the ready local market for the coal. Future prospects for UK coal are likely to remain favourable (unless there is a massive swing in exchange rates) in view of rising transport costs which increase the attractiveness of UK coal over imports and the fact that UK infrastructure for importing coal is already at its limits. Moreover there is a threat of an energy deficit in the UK, local production is seen as a strategic resource and the recent energy review by the Welsh assembly highlighted the need for the continued use of coal
· The company's strong corporate citizenship ethic, health and safety management systems, environmental policies, community relations programme and apprenticeship scheme whereby local young people train for two days a week at Swansea College and work three days per week underground thereby safeguarding local skills and increasing the quality of the workforce.
· The additional revenue streams from sandstone and coal tip recovery
For shareholders right now the biggest uncertainty is the impact of Western Canadian Coal's acquisition of Cambrian Mining, though to date there has not been any immediate reaction to the May 25th announcement with the share price currently hovering around the 20p mark, valuing the company at £26m.
Energybuild has put in all the groundwork and thus far has succeeded in delivering on its targets. As discussed above there are a number of risks which could deflect the company off course, but for the moment it appears firmly on track for tripling its production of clean anthracite coal, as planned, by 2011.
A recent Ambrian broker's note rated the company highly in terms of the quality of both its management and assets, while the first conclusion of the Wardell Armstrong technical report, as discussed above, was that the Aberpergwm Mine and Treforgan extension is "a very interesting and rewarding mining project and is likely to be so for a considerable time.
Aberpergwm Mine has been successfully developed because of the commitment, dedication and determination of the experienced mine management team and the workforce". The report also concludes that the NPV of the Aberpergwm mine at a 10% discount rate is £88.6m.|
|lasata: EBG price strong again - possibly WTN will sell them off?
Or is it the super demand for coal in this big freeze?|
|jonwig: Shame, Azalea.
Brian, the substance of your post (for which thanks) has been in the FT and elsewhere, and ATH's results are pretty positive on the coal price.
The trouble with a falling share price here and now is that we don't know whether there's a company-specific problem, forced selling or general market malaise.|
|jonwig: ATH FY results are optimistic, though the share price hasn't responded well:
|jonwig: I see Seymour Pierce estimated (just after the FY results) PBT of £3.5m and eps of 2.7p for the current year. (£11m and 8.5p for 2010.)
The company forecasts production of 265,000 t (drift mine) this year. Assuming a margin of £15/t that's £4m operating profit. Adding opencast and recovery profits and taking off £1m for additional costs gives just their figure, so we can see where they are coming from.
More interestingly, the company targets drift output of 440,000 t for 2010 and £750,000 t for 2011.
Assuming gross margins are steady and fixed costs rise more slowly than revenues, it's easy to envisage eps of around 20p for 2011.
Also, EBG will have no dependence on its bankers.
I suppose it's too much to expect the current market to recognise this - all the better for those with cash to buy while prices last!
WTN seems to be even cheaper, though I haven't really researched it. The share price there is in free fall, so I suppose we're lucky!|
|golspie: Given Cambrian already own 27.51% of EBG where will that put them as being holders of 30%+? A compulsory bid?
The share price has nearly doubled in less than six months. After the pre-AIM hiatus when the company was supposed to come to market @40p this price rise is satisfying to see. I have held for about three years, The profile is very low as the price is not quoted in the FT and I believe there are only 100 or so shareholders.|
|confucius1: Why coal could be the energy of the future
By John Stepek
August 08 2007
Amid all the worries about credit markets and financial derivatives, an interesting development in the 'real' economy may have escaped your notice.
For all the talk of green energy and burning less fossil fuels, the soaring oil price has made one abundant, old-fashioned, and defiantly dirty fuel source look considerably more attractive.
We're talking about coal. In fact, so attractive has it become, that we may soon see coal mining make a return to the valleys of South Wales. Two mines that have been shut since the mass closures of the 1980s are set to reopen shortly.
The restarting of the Aberpergym and Treforgan mines in South Wales will be funded by the flotation of Energybuild on Aim. The mining group is already producing coal from an opencast mine, supplying a Renewable Energy Generation (RWE)-owned power station in the Vale of Glamorgan.
Get the latest Energybuild share price
How coal made a comeback
It's becoming economical again to supply power stations with home-hewed coal, because of a strong surge in coal prices. According to the McCloskey coal consultancy, the price for world coal delivered to the UK was $102 per tonne last month, compared to $74 last July.
Now coal's always been important. It accounts for a quarter of global energy consumption, compared to nearly 40% for oil. More than half of America's electricity comes from coal, while 80% of China's does.
But what's driving the current revival? One factor behind the recent strength in the price has of course been high oil prices. The drive to find cheaper sources of power has been a boon to alternative fuels across the board. And it's not just about burning coal in power stations.
Coal can also be converted into liquid fuel this technology was used by South Africa under apartheid-era sanctions, but it is now becoming of wider interest. Coal to diesel technology is thought to be cost-competitive at oil prices of around $35 to $40 a barrel. China is pumping $15bn into the industry and aims to replace 10% of its oil imports with coal-liquefied oil by 2013.
There's also the question of energy security. At the moment, much of our oil comes from parts of the world that are volatile, to put it politely, and in many cases downright hostile. This wouldn't be a problem if we could somehow replace oil with coal. America has such abundant reserves of the black rock that some have described it as "the Saudi Arabia of coal".
And of course, there's the huge economic boom in the east, and particularly China, which has driven the price of almost all raw materials higher. Even though China is the world's biggest coal producer, it is likely to become a net importer within the next couple of years, the government reckons. And India's government reckons it will be consuming four times as much coal as it does currently by 2031.
Profiting from the black stuff
So what's the best way to buy into coal? You could look at Energybuild (EBG), but there's no doubt that it's a high-risk play, as with any mining minnow. A far less risky pure play on the fossil fuel is US-listed Peabody Energy (BTU). The company is the world's largest private sector coal company. Its shares trade on a price-to-earnings-growth ratio of just over one, which means they're not cheap, but are reasonable value, particularly if you agree that the coal price is likely to keep rising.
Another play is FTSE 100 mining giant Xstrata (XTA). The company is actually the world's largest exporter of thermal coal (used in power generation), and the fifth-largest producer of hard coking coal (used for industry, such as steel production). It's by no means a pure play - it has significant exposure to many other commodities as well, including copper, nickel and zinc.
But there are other compelling reasons to buy Xstrata - the group has a huge development pipeline, it's keeping a tight grip on costs, and despite strong growth in the share price over the past year, it's still valued at a discount of around 20% to larger peers such as Rio Tinto. With commodity prices likely to remain solid across the board, Xstrata looks like a decent bet too.|
Energybuild share price data is direct from the London Stock Exchange