MTE: Metrocoal

[lawrence]

Looks like a runaway train speeding into the sunset with its parent company MLM on the same track :eek2:

[mark100]

MTE looks good I think. Market Cap is $58m, cash of $15m, chinese backing and some thermal underground coal resources of over 500 Mt. Bundi is a 381Mt resource and is immediately to the south of NEC's Elimatta project (NHC currently bidding for) and near Xstrata's Wandoan holdings. I bought a few earlier this week when they got a drilling contractor signed up.

RBS initiated coverage of MTE last week with a $1 price target. Currently sitting at around 60c, double where it was back in Feb when I first picked up a few. RBS basically think its cheap based on an EV/Resource basis which I agree with

[Huang Chung]

Hi Mark

My broker has been nagging me about MTE for a while now. Finally took his advice and picked up a few today.

[drillfix]

RBS initiated coverage of MTE last week with a $1 price target. Currently sitting at around 60c

I wonder if these guys actually mean that target will get hit or do they want punters to think that so they can sell to them? :P

What seem to be an upward thrust is starting to turn into downward pressure. Unless there is some favourable news for the co, there seems to be momentum to the downside. .

HC, are you sure your broker also is not selling to you while they unload? I dont really trust brokers as they seem to sway with calls on a daily or weekly consensus.

[drillfix]

Gap is now filled at 0.505c so is this where we may see a potential bounce? Yet meanwhile the sp is now down a near 10% today.

Perhaps a good time to pick some up? Who knows, will see~!

[Huang Chung]

Hi Drilly

Yeah, an interesting day. From memory, I picked up most stock at 52c, but also some at 53.5c (I won't swear to that until I receive the contract note). My boy was in Sydney today, so wasn't banging the MTE drum with clients. Sold down some Coalspur to fund the purchases (Coalspur has been a hero stock in this market).

[drillfix]

Hi HC, took a stab and managed to pick some up at 50.5c on the gap fill and then dumped at close for a small profit.

Will see how the weekend and next week pans out considering another entry depending on which way the river flows so to speak.

Glad your Coalspur has done you well mate :)

[Huang Chung]

The way the US market finished last night, you may have made the right choice drilly. Hotfire over on HC also highlighted the gap at 50.5c and picked up some stock.

Still, if you can get a few MTE on the cheap, and afford to shove them in the bottom draw for a while, you'll probably do quite well out of them.

[mark100]

http://economictimes.indiatimes.com/articleshow/9106855.cms?prtpage=1

Tue, Jul 05, 2011 | Updated 04.42AM IST5 Jul, 2011, 04.31AM IST, Vinu Lal,ET Bureau

R-Power, CESC, Essel Mining in race for Australian firm
BANGALORE: Three top Indian companies, including Reliance Power, Aditya Birla Group's Essel Mining and the RPG Group, have been shortlisted for final round discussions to buy a strategic stake in Australian coal mining firm, MetroCoal. The Australian company plans to raise $600-700 million from the sale.

The Queensland-based MetroCoal has put two of its thermal coal bearing blocks with proven reserves of 1.2 billion tonnes, up for sale and has invited expressions of interest from suitable companies. According to people familiar with the development, the three Indian companies along with at least two other foreign companies have been shortlisted for the final round of talks.

In fact, a team of senior executives from MetroCoal is touring India next week to visit the shortlisted Indian companies. MetroCoal did not respond to email queries on this issue. Metrocoal is planning to divest equity stake at either the entity level or project level, said the people cited earlier. The two exploration blocks in the Surat basin in Queensland, have high value thermal coal used by Indian power plants.

The negotiations are focusing on the structure where a special purpose vehicle would be formed that would own the two exploration blocks and offload 25-30% equity along with long-term off-take commitment from the strategic partner. Both Reliance Power and Essel Mining declined to comment. The RPG Group, which has large interests in electricity, did not elaborate to specific queries. ASX-listed Metallica Minerals owns MetroCoal and has 12 exploration blocks overall which are in various stages of commercial production.

A RBS Morgans report last month mentioned that, like Linc Energy, MetroCoal will also attract very large strategic premiums as part of the ongoing consolidation. The report also added that Metro-Coal could attract strategic interests at both the asset and corporate levels. MetroCoal had earlier struck a deal with Chinese explorer SinoCoal for jointly developing one of its blocks in Columboola tenement.

The talks with Indian companies are unlikely to be affected by recent developments related to Lanco Infratech, said sources. Lanco, which had acquired Griffin Coal last year, is facing a lawsuit from one of its clients Perdaman Chemicals for allegedly reneging on contracts. Lanco wanted a revision in coal prices. MetroCoal's assets are relatively larger than Bandanna Energy blocks, which had been put on the block recently.

"Considering the kind of response Bandanna Energy auction has managed, Metro-Coal would not have any issues in fetching good valuations, said one person familiar with the process. India imports around 70 million tonnes annually and is expected to touch 200 million tonnes by 2016, primarily due to massive capacity additions by coal-fired power plants.

[drillfix]

Sheezus, I hate when I jump off a stock and "then" it moves or runs on ya.

Good luck to those holding.

[Huang Chung]

Bit of a clarification by the company after that news article, but, non the less, seems to have drawn attention to the stock. I chased, and paid 70c for another 50,000....seems a bit a silly move now.

Hopefully, we'll see a bit more broker coverage on the stock going forward.

[mark100]

HC, Maybe a little overcooked short term at 70c but I think its only a matter of time before MTE sees $1 plus with the resource base they are proving up

[soulman]

Sheezus, I hate when I jump off a stock and "then" it moves or runs on ya.

Good luck to those holding.

How much you offload MTE for Drill? Last time I was on it was 47. Should have hold them when I first venture on them at 33. This is one stock where LT is good, whereas on the flip side, NAV LT has big financial consequences.

[lawrence]

ASX-listed Metallica Minerals owns MetroCoal and has 12 exploration blocks overall which are in various stages of commercial production.



Mark100

MLM owns only 46%

[mark100]

Mark100

MLM owns only 46%

Yes I know there are several factual errors in that article but I justed posted it straight from the website. But where there is smoke there is usually fire and there was plenty of fire under the share price yesterday!

[Huang Chung]

Good to see MTE holding yesterday's gains.

[lawrence]

That's because MTE are in India having talks with interested parties so the sp reflected this meeting but I agree with you about the smoke

[mark100]

More resources proved up

[mark100]

COK announced today the sale of 49% of a deposit to Mitsui for the equivalent of $0.90 per tonne of resource. Very roughly MTE is trading at around 12c per tonne ($135m MCap / 1100 Mt)

[Huang Chung]

COK announced today the sale of 49% of a deposit to Mitsui for the equivalent of $0.90 per tonne of resource. Very roughly MTE is trading at around 12c per tonne ($135m MCap / 1100 Mt)

You see anomalies like this, and just shake you head when you think back at all that Efficient Market Hypothesis crap you learned at Uni......

[mark100]

You see anomalies like this, and just shake you head when you think back at all that Efficient Market Hypothesis crap you learned at Uni......

Yeah for sure. Although I haven't really looked into the details of the Resource COK sold. COK overall trades at around $0.30 per tonne of resource. Still more than double MTE's multiple

[Huang Chung]

Hit a high of 85c on this dog of a day. Finished at 79c, which was still a great result.

MLM didn't share the gains, so I went with the arb and picked up a few more MLM.

[shasta]

Hit a high of 85c on this dog of a day. Finished at 79c, which was still a great result.

MLM didn't share the gains, so I went with the arb and picked up a few more MLM.

Will update the MLM thread, in light of this movement

[lawrence]

Wow this is really flying hit a high of .93c today pulling along MLM [ .495 ] looks like the train has all green signals ahead to 1$ JMHO

[mark100]

Todays quarterly again confirmed MTE is on target to have a gross JORC inferred thermal coal resource of 2 - 3.5 billion tonnes by Dec 2011 (1.4b gross now).

Market Cap is $130m. Even taking out the share of JV partners MTE is very cheap on an EV/t basis. Assuming 2b tonnes net to MTE puts it on an EV/t multiple of $0.065/t. I can't find one on the market that cheap, especially one that is near Xstrata's massive Wondoan project

[soulman]

Are you holding Mark? I bought in this week and am below water. Thought it might break into the 80's but instead did the opposite.

Always thought one day MLM might offload their 80 mil share stake to a foreign investor like Xstrata and cause a spike in both MLM and MTE share price.

I am holding both MLM and MTE.

[mark100]

I trade this one a heap soulman. Out in the 80's after the first big run and then have done quite a few little short term trades. I sold late last week at around 72 but eneded up buying back this week at 75 average. Like you I thought a decent break was coming but the Europeans are trying to spoil the party.

Basically I think MTE is/will be the cheapest coal company on the market on an EV/t basis. And not only that, the resource is quite well located in the Surat Basin near Xstrata.

A calmer market could easily see this one over $1 in the next 3-6 months I would think. Longer term it has potential to be a multiple of that but a lot can go wrong so don't hold me to that!

[soulman]

No worries Mark. Definitely just a nibble on MTE, so won't lose sleep if they slip a little bit. Worth a long-term hold.

On a different scenario, I had a hunch Banpu would T/O HUN after buying a stake at $1.50. Sold at a loss during the market turmoil at $1.28 and looks like a fool 2 weeks later when Banpu announce an all cash T/O for $1.80 and declare the offer unconditional today.

[soulman]

It's amazing how this coy can sink to this low of 15 cents. Is thermal coal a bad word now?

I don't hold anymore but will be interested at 10 cents.