Mensa
21-01-2011, 12:50 PM
Continental Coal Limited
Given the excellent long term growth fundamentals (which are also backed up by good technicals at the present time) looks like both CCC and CCCO have a very bright future. I think we're only at the very beginning of a great growth story here.
The options expiration date is 13 Feb 2013 and exercise price is 5 cents.
Reference website links ….
http://www.conticoal.com/
http://conticoalers.com/
Closing prices as of 20 January 2011
CCC 8.7 cents
CCCO 5.4 cents
The latest broker report listed yesterday on CCC's website at ...
http://www.conticoal.com/investor-relations/broker-reports/ by Old Park Lane Capital
gives an excellent summary of Continental Coal to date and the company's future growth opportunities.
Some extracts from the research report ….
Executive Summary
Thermal Coal Producer: Continental Coal Ltd is South African BEE-compliant thermal coal producer listed on the Australian Stock Exchange (ASX:CCC). Post the Mashala Resources acquisition, the company has two operating thermal coal mines (Vlakvarkfontein and Ferreira) and a portfolio of thermal export and domestic coal projects located in South Africa and Botswana.
A Junior Company with Senior Management: With the assimilation of Mashala staff, Continental has assembled a very experienced senior management team for a junior company. We view the high calibre team as a key strength as Continental embarks on a steep growth curve to being a mid-tier producer. CEO Don Turvey was previously head of BHP Billiton’s project development team in SA.
The Next Mid-Tier Producer: Continental Coal is on the way to becoming one of South Africa’s leading mid-tier producers, targeting a production rate of 7 Mtpa ROM coal by 2012. The fractured nature of the junior coal sector in South Africa represents an opportunity for Continental Coal, especially in terms of access to infrastructure and consolidation through further acquisitions in the coal space.
Project Pipeline: The company has an impressive pipeline of near term production assets and growth projects. Within 18 months the company should have four mines in production with Penumbra next in line, followed closely by De Wittekrans. The company has already proven its ability to fast- track projects by taking Vlakvarkfontein from acquisition to production in less than 12 months.
Mashala Acquisition: The first stage acquisition of Mashala resources has been completed in a landmark deal adding a substantial resource base, current export production, access to export markets through rail and port allocations and an experienced management team into the mix.
Strategic Off-take and Funding: The company has secured a pivotal off-take and financing
arrangement with EDF Trading, the world’s largest power utility, covering 100% of export production.
Botswana Exploration Blue Sky: Continental also has a 6-7 Bt exploration target in the Mmamabula coalfields in Botswana offering early stage exposure to a new coal district. We currently assign no value to Botswana and view the project as a free option on blue-sky growth.
Growth Beyond South Africa: Long term company plans will consider expansion and diversification opportunities in new countries within Southern Africa and new commodities such as coking coal. The focus will be on production, or near production assets with low capital expenditure requirements.
Strong Leverage to Thermal Coal Prices: Continental Coal exposes investors to upside from the interaction between robust long term demand for thermal coal from China and India, and supply side constraints from the traditional producing coalfields in Africa, Australia and Indonesia. Export thermal coal prices recently broke through US$100/t fuelled by the impact of flooding in Australia.
Export Price Exposure: Continental Coal negotiates all its export coal off-take agreements based on the spot market at Richard’s Bay, a clear advantage over companies selling coal on a cost-plus basis. The company’s new development projects will shift the focus to export coal from domestic coal.
Funding Track Record: The company has successfully raised over A$100m over the last year for acquisitions and project development as part of an aggressive growth strategy.
London Listing on the Way: The company plans to list on AIM in London by the end of H1 2011.
Valuation: We value Continental Coal at A$451m, or A$0.13 per share (fully diluted), a 49% premium to the current share price of A$0.084. Our valuation suggests that Continental Coal represents an attractive investment opportunity at current levels. We believe the development of the De Wittekrans Complex is the key to transforming Continental into a mid-tier producer. We assign little value to early stage projects and exploration but recognise that these add significant option value into the mix.
Given the excellent long term growth fundamentals (which are also backed up by good technicals at the present time) looks like both CCC and CCCO have a very bright future. I think we're only at the very beginning of a great growth story here.
The options expiration date is 13 Feb 2013 and exercise price is 5 cents.
Reference website links ….
http://www.conticoal.com/
http://conticoalers.com/
Closing prices as of 20 January 2011
CCC 8.7 cents
CCCO 5.4 cents
The latest broker report listed yesterday on CCC's website at ...
http://www.conticoal.com/investor-relations/broker-reports/ by Old Park Lane Capital
gives an excellent summary of Continental Coal to date and the company's future growth opportunities.
Some extracts from the research report ….
Executive Summary
Thermal Coal Producer: Continental Coal Ltd is South African BEE-compliant thermal coal producer listed on the Australian Stock Exchange (ASX:CCC). Post the Mashala Resources acquisition, the company has two operating thermal coal mines (Vlakvarkfontein and Ferreira) and a portfolio of thermal export and domestic coal projects located in South Africa and Botswana.
A Junior Company with Senior Management: With the assimilation of Mashala staff, Continental has assembled a very experienced senior management team for a junior company. We view the high calibre team as a key strength as Continental embarks on a steep growth curve to being a mid-tier producer. CEO Don Turvey was previously head of BHP Billiton’s project development team in SA.
The Next Mid-Tier Producer: Continental Coal is on the way to becoming one of South Africa’s leading mid-tier producers, targeting a production rate of 7 Mtpa ROM coal by 2012. The fractured nature of the junior coal sector in South Africa represents an opportunity for Continental Coal, especially in terms of access to infrastructure and consolidation through further acquisitions in the coal space.
Project Pipeline: The company has an impressive pipeline of near term production assets and growth projects. Within 18 months the company should have four mines in production with Penumbra next in line, followed closely by De Wittekrans. The company has already proven its ability to fast- track projects by taking Vlakvarkfontein from acquisition to production in less than 12 months.
Mashala Acquisition: The first stage acquisition of Mashala resources has been completed in a landmark deal adding a substantial resource base, current export production, access to export markets through rail and port allocations and an experienced management team into the mix.
Strategic Off-take and Funding: The company has secured a pivotal off-take and financing
arrangement with EDF Trading, the world’s largest power utility, covering 100% of export production.
Botswana Exploration Blue Sky: Continental also has a 6-7 Bt exploration target in the Mmamabula coalfields in Botswana offering early stage exposure to a new coal district. We currently assign no value to Botswana and view the project as a free option on blue-sky growth.
Growth Beyond South Africa: Long term company plans will consider expansion and diversification opportunities in new countries within Southern Africa and new commodities such as coking coal. The focus will be on production, or near production assets with low capital expenditure requirements.
Strong Leverage to Thermal Coal Prices: Continental Coal exposes investors to upside from the interaction between robust long term demand for thermal coal from China and India, and supply side constraints from the traditional producing coalfields in Africa, Australia and Indonesia. Export thermal coal prices recently broke through US$100/t fuelled by the impact of flooding in Australia.
Export Price Exposure: Continental Coal negotiates all its export coal off-take agreements based on the spot market at Richard’s Bay, a clear advantage over companies selling coal on a cost-plus basis. The company’s new development projects will shift the focus to export coal from domestic coal.
Funding Track Record: The company has successfully raised over A$100m over the last year for acquisitions and project development as part of an aggressive growth strategy.
London Listing on the Way: The company plans to list on AIM in London by the end of H1 2011.
Valuation: We value Continental Coal at A$451m, or A$0.13 per share (fully diluted), a 49% premium to the current share price of A$0.084. Our valuation suggests that Continental Coal represents an attractive investment opportunity at current levels. We believe the development of the De Wittekrans Complex is the key to transforming Continental into a mid-tier producer. We assign little value to early stage projects and exploration but recognise that these add significant option value into the mix.