New World Res A Share Discussion Threads

[bobsidian] 21/5/2013 08:49

BiggerThus

"NWR on the other hand does have a viable business."

Are you sure ?

Any business forced to take measures such as an across the board cut in wages and salaries could hardly be giving a signal that its business is viable on an ongoing basis.

Any company raising the alarm on debt covenant breach whilst suggesting they are not in control of the forces that could drive the company toward that breach is hardly signalling viability.

I am not sure which tide you believe is about to turn. If demand is strong then why has the market price for coal been falling ? Anyone can sell £1 coins for 75p and lay claim to having a stream of revenue that suggests there is a viable business at its core. Revenue does not guarantee profit. And that seems to be the current problem for mining as a whole. There is little point in individually and collectively reporting record output if demand is insufficient to absorb that output and the market price for that output falls because of the excess of supply over demand.

[thorpematt] 20/5/2013 02:37

Ultrapunch
Just seen yr post :-)
fwiw yes i had a somewhat fortunate escape here. I tend to set tight stops nowadys since accepting than one is wrong is perhaps the hardest thing to do.

My thoughts on coal are still that in the long run we are massively dependant on it. But clearly in the short term its not the place to be.

I actually revisited the thread today since i had been looking at on loan stock figures and this came up on a toplist.

[biggerthus] 18/5/2013 00:47

bobsidian, I guess it's a good thing that NWR is not a sporting goods retailer.

I have seen far worse going concern notes, but then I do spend a lot of time on (cough, AIM) resource and energy stocks. NWR on the other hand does have a viable business.

It's ironic that while the price of coal has been battered, the demand for it is increasing and will continue to do so. I would personally look at smaller operators as potentials for 'removal', as the tide will turn - and likely sooner rather than later imo.

[adieadie] 17/5/2013 08:01

the risk reward ratio isnt there yet, at its best it was 700p, long time befre it gets there again... so you need to be buying this sub 30p IMO

[bobsidian] 17/5/2013 07:37

If you do not view such a going concern note as "scary" then I am somewhat surprised. The "worst" going concern note I have read in recent years was one issued by JJB Sports. The tone of the NWR going concern note was not that far removed from the JJB Sports note.

The wording contained in the going concern note was far from being bog-standard. The movement of what is ordinarily contained in the risk section of an annual report into the body of a going concern note is a step often times strongly resisted by management because of the implications it may have. Financiers become alarmed when they read such elevated levels of risk to the viability of a business in full knowledge that this kind of going concern note tends to be "forced" on management by auditors.

The management of NWR have commented on business conditions being the worst for the coal mining industry in almost 30 years. As capacity is taken out of the industry so this may trigger a recovery in coal prices which would aid in stabilising the industry. Is NWR to be part of the capacity to be removed ?

NWR may indeed represent a buying opportunity at current levels but it does seem one for those willing to take on high risk.

[ultrapunch] 16/5/2013 23:18

"THORPEMATT
21 Feb'13 - 23:16 - 1512 of 1520 0 0

Looks a tidy long-term bet at this price.

Nibbled a few."

Hope you soon sold them! Ouch!

[bobsidian] 16/5/2013 17:01

The going concern note makes for startling reading:

"There can be no guarantee that it will be possible to either agree a further suspension of covenant testing or to agree other facilities. In that event the ECA loan would have to be repaid and the RCF would not be available to the Company. Even taking account of the repayment of the ECA, Directors anticipate that these initiatives will result in the Group having sufficient liquidity for the foreseeable future, although a significant further deterioration in coal prices, the inability to action the initiatives or any significant operational issues affecting revenue generation could result in a shortfall of funds which would require the Directors to take further cash preserving actions or to seek additional sources of funding."

A lot of ifs and buts with most being largely outwith their control. No point in producing unless contractually obliged to do so if production and subsequent sale augments losses and consumes precious available cash resource. The question now is which costs are fixed and which are variable. Little wonder the fall in the share price. Not the only coal mining company being driven to the edge of extinction. The management now forced to take drastic action to try and position the company for survival. If NWR succumb then what hope for any other coal mining company.

The next few months could be another critical period for the mining industry as a whole as it moves to align supply with demand across an array of commodities.

[adieadie] 16/5/2013 16:35

holy cow, thats some drop today isnt it?

[salpara111] 16/5/2013 15:54

All pretty desperate, fighting for survival and about to be relegated from the FTSE 250.

[adieadie] 02/5/2013 07:41

these coal companies are dangerous when they get into losses du to coal price, i watched UK Coal go down due to this and they had huge land assets. The coal side of the business can just gobble up money like there's no tomorrow.

if they can return to profits in a year or two, they might survive as a healthy business, otherwise they end up in massive debt and staying alive only to pay down that debt.

when are they going to be making money again?

[sanks] 18/4/2013 22:11

I have a buy order in at 71p, 42p and 29p
Thsts cos it has a feel of AQP about it

[p bear] 18/4/2013 16:17

When you are a loss making company these things happen. The swing from 1m loss from 130m profit YoY.

Where too next? Watch the coal prices. These were always high cost assets.

I am long and will buy again if we approach 140.

[m w] 17/4/2013 19:18

new all time low where next ???

[wilksey1] 22/2/2013 10:12

watched the web cast yesterday and decided to add some more i now have 20,000 and yes i agree with you thorpematt its going to be a long hold.

[thorpematt] 21/2/2013 23:16

Looks a tidy long-term bet at this price.

Nibbled a few.

Coal needs a local market really and the (enviro)mentalists don't like it but it's still gonna be a major contributor for energy supply for some years yet so long game it is for me.

[sanks] 04/2/2013 22:31

ades45, does this mean anything toya....

...............

[tamboerskloof] 16/1/2013 14:26

Or a Gigolos boxer shorts.

[tamboerskloof] 14/1/2013 11:08

The share price jumps around a bit, wild fluctuations, RNS wasn't received very well today, main problem is Euro v Pound exchange rate at a loss now, just have to stay with it for medium term at least.

[biggerthus] 18/12/2012 23:35

Tamboerskloof, thanks - good snippet.

Am looking closely at coalers as they've been battered recently - and probably on purpose.
I have it on good authority that the Chinese already acknowledge that there's no way they will be able to secure enough fuel to satisfy their demand for cars/transport by 2020 ... which is why they're going electric, with the obvious consequence.
It's probably not a short-term punt, but if one has time then this is probably a great time to buy.

[thorpematt] 18/12/2012 23:35

Getting quite a lot of press coverage. Original source is:-

[tamboerskloof] 18/12/2012 19:16

BT ...Its the quarterly expiry week,its roll-over day when December contracts expire. Also - Central Europe-focused hard coal and coke producer New World Resources surged on Tuesday afternoon after the International Energy Agency (IEA) said that coal will come close to surpassing oil as the world's top energy source by 2017.

According to the IEA's Medium-Term Coal Market Report, the world will burn around 1.2bn more tonnes of coal per year by 2017 compared to today, equivalent to the current coal consumption of Russia and the United States combined.

"Coal's share of the global energy mix continues to grow each year, and if no changes are made to current policies, coal will catch oil within a decade," said IEA Executive Director Maria van der Hoeven.

[biggerthus] 18/12/2012 16:42

Make that 10% now.

Is there some news coming, or just sentiment changing on coalers?

[tamboerskloof] 18/12/2012 11:59

What caused the 8% jump this morning, no RNS issued!!