PRC Pike River Coal

[the machine]

quote:Originally posted by BigBob

Interesting article by Bruce McKay in today's Dompost..

Under the headline "Pike River offers punt on exchange rate" it concludes...:

"...the risk is not really about the mining and transport. It isn't even about the market for coal or the price of the commodity. An investment in the company is really a play on the exchange rate right now. If you think the Kiwi dollar is going to fall against the US dollar, then Pike River looks a whole lot more appetising as an investment"

(Sorry can't find it on stuff.co.nz so can't link)...

full article
Pike River offers punt on exchange rate
THE OBSERVER - BRUCE MCKAY - The Dominion Post | Wednesday, 6 June 2007

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AdvertisementOne of the perennial problems with the New Zealand equity markets is the number of "one company" industries.


For example, we have one listed airline, one listed airport, one listed phone company, one listed mass retailer, one household appliance manufacturer and so on.

As a result, New Zealand investors have to keep track of a wide number of industries to know what is going on. When a new company comes to raise capital and list there is a high probability that investors will not only have to get to grips with the company but also a new industry.

There are of course cases where another listed company is not going to trouble the minds of investors too much. Property is at the top of that list, but also retailing, electricity and, at a pinch, building supplies.

The promoters of the Pike River Coal IPO have something of a challenge – educate the market about the company and about the global coal industry, and, while they are at it, the dynamics of the global steel industry.

New Zealand investors have had scant exposure to resource stocks on the local exchanges, so the challenge is to get at least some investors to wean themselves off property and yield and focus on a growth story.

West Coast coal is evidence that God does have a sense of humour. It is very high quality coal; in fact, some of the best coal in the world comes from the West Coast of the South Island. But getting at the coal and getting it on to ships to go to the world's steel mills is a big challenge.

Pike River is a project focused on the Brunner coal seam, the same one that Solid Energy is mining near Westport. Solid Energy's mine is opencast and well supplied with infrastructure, but Pike River's mine is up a narrow valley and then up a 2.3-kilometre underground tunnel.

Once the coal comes out of the mine it is trucked to Greymouth, then put on a barge to New Plymouth before finally being transferred on to ships going further afield.

It is by any stretch a high cost project; luckily Pike River is mining high quality coal. The company plans to mine its 55-million-tonne resource over the next 20 years, pulling out a little less than one million tonnes on average a year. The target is about one third of the total resource, though the target could rise once mining is properly under way.

The cost to mine a tonne of coal is estimated at $37, while the cost of transporting it to the port in Taranaki is put at $40 a tonne. The price the company can get for the coal is about US$100 (NZ$135) a tonne at the moment, leaving a gross margin of NZ$58 a tonne, or 43 per cent. It's a healthy margin, but investors won't be able to assess the financial impact of the margin or the limited production targets in the prospectus because there are no forecasts, apart from the very limited cash flow forecasts required by the Securities Act. Why?

The problem is that the Australian Securities and Investments Commission has ruled that greenfield projects, such as Pike River, should not put fin

[Unicorn]

NZO heads dropped by 5 cents today, ex the 1-8 $1 Pike entitlement.

Which indicates PRC shares should list at over $1.40?

[777]

Depends on the uptake. I only have 20,000 NZO so am entitled to 2,500 which I won't bother taking up. Would rather let things settle down then make a decision on whether it is worth the investment. If you get $1.40 then good luck to you.

[tim23]

Won't you get the minimum 3000 share entitlement?

[Bling_Bling]

When do we receive our Pike IPO entitlement as a NOG shareholder?

[Steve]

quote:Originally posted by Bling_Bling

When do we receive our Pike IPO entitlement as a NOG shareholder?

Hopefully before the close date, with enough time to read it, attach a cheque and post it back!

Like 777, my entitlement is for less than 3,000 Pike - does this mean that I have to 'top' up to the minimum 3,000 shares?

[BWR]

Bling Bling,

The record date was close of business last Wednesday. The entitlement letters and prospectus will be in Monday nights mail.

[MPC]

And i will be in for 3000. These are for my daughter, fits the criteria for a good longterm hold in my books. Forget about the short term fluctuations and have a look again in about 5 years. thank you very much.

First beer opened,go the all blacks

[Tok3n]

Coal companies have done well in Aussie.

Maybe its one fresh new KiwiSaver funds will sink into.

But these delays aren't good though

[johndeyell]

Well the delays really are over now - the IPO is finally open...