ATH Resources Share Discussion Threads

[wassapper] 10/6/2008 08:35

two reasons

1. Delay in bringing on new mine
2. Contract pricing already afctored in.

Good news:

1. Management remains confident of full year forecast
2. 12m tonnes of washed coal at spot in Oz.

[spaceparallax] 10/6/2008 08:33

Disappointed at the significant dip in PBT and EPS year on year. The one ray of light is the increase in reserves. I'm particularly baffled as to how we've managed to dip given the recent explosion in energy prices.

[loafofbread] 09/6/2008 09:13

The way the share price has been held at £2.00 recently makes me think a placing is on the cards rather than a rights issue.

[notanewmember] 09/6/2008 08:05

Frustrating news! Voted with feet.

[loafofbread] 08/6/2008 19:05

I posted they might go for a cash call to fund their expansion. Happy with that if the OZ deal comes through. Not to sure what to make of the profits shortfall this half.

Interesting week ahead!

[timbo003] 08/6/2008 07:11

The Curate's egg comes to mind

[cnx] 06/6/2008 01:29

sharpshare

do you know if pms receives any dividends from their two scottish mining (mining scotland and scottish resources)interests

is there another way to invest in these companies?

thanks

[muffster] 04/6/2008 18:29

Agreed but look at recent trades, e.g. 27.05.08. Big buys coming through

[sharpshare] 04/6/2008 11:52

Artemis holdings now down from 3,035,675 on 20 May 2008 to 2,370,675 on 28 May 2008. Artemis selling appears to have put a cap on the share price around 200p for the past several weeks/months despite the product ATH produces more than doubling in price. I would hazard a guess that when Artemis decides to stop selling or when it has sold all its shares the share price might go up assuming that the coal price stays relatively high. Time will tell.

[jonwig] 03/6/2008 14:06

Thanks for that, Sharpshare.

I've looked at your estimates for future profitability here, which are well-argued, but rather at odds with broker forecasts of eps around 15p and 17p for 2008 and 2009.
Anyway, next Tuesday should make the outlook clearer.

[sharpshare] 03/6/2008 13:45

Glowing Prospects in the Coal Sector

[sharpshare] 03/6/2008 10:41

There is a panic scramble for spot coal supplies from some utilities in Asia.
There have been lots of new coal fired power stations built in Asia over the past few years with many more under construction. Demand growth is currently outpacing supply growth and should continue for the next few years.
Australia coal shares have been infected with takeover fever. The sudden royalty tax rise from 7% to 10% in Queensland means that Australia coal is now less competitive. Newcastle FOB of $155 is record high, add on another $65 transport cost to Europe which means Australian steam coal now costs around $220 for European customers.

[notanewmember] 03/6/2008 10:23

CDN going up like a rocket

[loafofbread] 03/6/2008 10:10

Excellent piece of research/deduction.

It must be tempting to ramp up production to take advantage of the current high spot price. If ATH don't have enough cash to expand that fast I'm more than happy to suffer a litle dilution/take part if I know it's being dug up at £30 a ton and sold on at £88 a ton!

A bit of news on the Oz front wouldn't hurt either.

[sharpshare] 03/6/2008 08:04

Impact of forward sales on EPS next year:
Forward sales in year to end Sep 2009 about 1.4m tons. (from the presentation)
Contract price around £33 per ton (sales price of about £1.33 per Gj (from a graph in the presentation) with about 24.75 Gj (from the prospectus) in each ton). Costs say about £27 per ton (an estimate, about 20% higher than last year) which could mean gross profit on contract sales of around £8.4m

Planned production in year to Sep 2009 about 2,779,000 tons (from the presentation). By deduction unpriced coal = about 1,379,000 tons. Current spot about £88 per ton which could mean gross profit on unpriced coal of around £84m. After other costs such as interest, admin etc and tax net profit after tax might be around £60m or EPS of 150p.
Risks include reduced production, planning delays, falling prices, higher costs etc.

Remaining forward sales per presentation:
Year to Sep 2010: about 1.15m tons priced at about £34 per ton
Year to Sep 2011: about .375m tons priced at about £36 per ton

Planned production:
Year to Sep 2010: about 3,047,000 tons (per presentation)
by deduction unpriced coal = about 1,897,000
potential EPS in 2010 at current spot, contract price, planned production about 196p



Like all miners expect sporadic production delays bad weather and increased costs. They might even surprise on the upside eg opening a coal mine in France/Australia? Or they might be gobbled up at a premium by a local power station desperate to reduce soaring fuel costs eg Drax or SSE?

Maybe some of the Western Canadian/Cambrian/Caledon magic might find its way to unloved ATH. I get the feeling there is just no interest here amongst investors even though the maths points to a terrific bargain. Many AIM investors are nursing big losses. Many UK Fund managers are suffering from redemptions and investment losses. UK income funds are big investors on the share register of ATH due to the big dividend. Until very recently it has not been easy to sell a boring coal mine investment to retail clients, much better for the marketing department to show glossy white wind turbines twinkling in a green meadow. Coal mining has a very low public opinion in UK. Green funds are raisng money supporting solar stocks, hardly any new money for coal miners in UK. Boring old coal stock could be an ideal way for making some money. Many investors only buy when the price has already gone up a lot just becasue the price has gone up a lot. The big money is to be made by building a decent position at a cheap price. Share prices of coal producers in Australia and USA have gone up a lot recently. Other UK producers UKC, HSP and PMS are only just starting to rise.

Although I do not know , there still seems to be an overhang from Artemis dumping. I would not be surprised to see an RNS sometime soon saying that Artemis has gone below a notifiable 3% interest. Press speculation suggests Fortis is trying to sell Artemis.

Interims out on Tuesday next week. Production already announced at around 800,000 tons which is lower than last year due mainly to planning delays. They seem to mine a lot more during the summer months. Expenses will probably be higher due to startup of Muir Dean and Grieve Hill extension as well as higher fuel costs, interest etc. Now I wonder what might happen to the share price if they announce a big contract at current spot prices?

[notanewmember] 03/6/2008 07:58

I m quietly confident here - a rising tide lifts all boats as they say. The coal sector is absolutely tiny, and global supplies are tight over the next couple of years at best.

All eyes are on oil price as a lead indicator, which I am sure is to correct, but is unlikely to go down unless the FED starts wake upto inflaton and raise rates from a lowly 2%, that it is now [and it can't afford to that].

[wassapper] 03/6/2008 06:16

Sharp - good research but I fear they have a lot on contract at lower prices. Some will be sold at spot or higher contract. Results on 10th so we shall see.

[sharpshare] 03/6/2008 06:07

New all time high for Rotterdam coal at USD 171.75 per ton.

Remember that ATH got an average of £32 per ton last year.
Current spot is £88 per ton. That's an increase of 175%.
If current prices stay high and costs per ton creep up to about £30 per ton then on a potential 2.75m tons production per year ATH could be earning about £160m gross profit per year. Mkt cap now around £80m at 200p share price with about 40m shares in issue.

[sharpshare] 02/6/2008 14:10

Higher coal royalty taxes announced in Queensland Australia.
At the moment, royalties are set at 7 per cent. From next financial year coal sold at more than $100 a tonne will be subject to a 10 per cent tax.

[sharpshare] 30/5/2008 11:47

Interesting comments.
"...Coal has more than doubled in a year to $167 a ton from South Africa and natural gas in Britain almost tripled...
...Delivery to Amsterdam, Rotterdam, and Antwerp for the next four years will stay above $154 a ton, futures contracts from ICAP Plc show... "

[cnx] 27/5/2008 23:31

sharpshare

thanks the ath presentation
your figure of #1800 could be high as the some of the esi contracts are fixed to 2011. however i think some 25% is not contacted for in fy 2008 and then there is the industrial and domestic use presumably at spot

[notanewmember] 27/5/2008 14:32

I sense the line of stock is dwindling

[sharpshare] 25/5/2008 16:09

Global Coal latest ARA (Amsterdam Rotterdam Antwerp) price is USD 166.08 per ton or about £84 per ton on 23 May 2008 up from USD 139.50 at the end of April 2008.

Perhaps going forward ATH could link their sales price to this index. EBG does as stated in it's latest interims that they linked the price of their coal to API2 (Cost Insurane Freight ARA)

Very informative presentation from ATH

Note on page 28 proven and probable reserves of 8.6m tons and another 12.8m tons of measured, indicated and inferred resources giving 21.4m tons in total. At spot price of GBP 84 per ton this could give a potential in situ value of £1800 million.

[sharpshare] 23/5/2008 08:47

New all time high for Rotterdam coal at USD 158 per ton.



Remember that ATH got an average of £32 per ton last year.
Current spot is £81 per ton. Thats an increase of 153%.