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Forbes Coal (FMC.TO)

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This could be my first venture into Coal mining (at the right price). I like the fact that they are backed by Stan Bharti and his Forbes & Manhattan / Aberdeen International (AAB.TO) groups. Same people behind Avion Gold (AVR.TO) too, and many more.

 

http://www.forbescoal.com/investors/presentations/forbes-factsheet-april2011.pdf

 

Forbes & Manhattan (Coal) Inc. (”Forbes Coal” or the “Company”) is a TSX-listed coal producer with exclusive operations in South Africa. Our vision is to build a high quality coal company with potential production capacity in excess of 10 million tonnes per year.

 

The Company has the asset base to grow organically through optimizing current operations at our Magdalena and Aviemore mines, expanding sales into export markets and continuing exploration of our coal assets. Forbes Coal has the potential to triple production from current levels using existing transportation and port allocations over next 2-4 years.

 

Our operating Magdalena and Aviemore mines have a substantial resource base of 54.2 million tonnes bituminous coal and 52.8 million tonnes anthracite coal. This translates into an approximately 20 year life of mine for each mine.

 

Both the Magdalena and Aviemore underground mines have expansion potential. Currently the Company has access to 197,000 tonnes per annum of export capacity at the Richards Bay coal terminal. Forbes Coal is increasing its annual export capacity incrementally over the next three years from 197,000 by 960,000 tonnes for a total export capacity of 1,157,000 tonnes per annum by 2013. The Richards Bay coal terminal is a deep-sea port, 190 kilometers north of Durban along the Indian Ocean. The terminal is the world's largest coal export facility, able to handle large ships and volumes and is accessible to the town of Dundee via the Richards Bay coal terminal rail line.

The current spot prices for export thermal coal are in excess of C$112 per tonne. Domestic contracts are currently slightly lower at C$83 per tonne. Anthracite coal sales prices range from approximately C$110 per tonne to C$160 per tonne, based on product quality and application.

 

Forbes Coal acquired the Magdalena and Aviemore mines through a 76.75% interest in Slater Coal (Pty) Ltd., a South African company which has a 70% interest in Zinoju Coal (Pty) Ltd. ("Zinoju"). Zinoju holds a 100% interest in the Magdalena bituminous mine and the Aviemore anthracite mine, as well as access to the 197,000 tonnes of export capacity.

 

COMPANY TICKER TSX: FMC

CLOSING PRICE (March 15, 2011) C$3.90

TRADING RANGE

(since September 27, 2010)

C$2.65-C$5.01

BASIC SHARES OUTSTANDING 34.8 M

FD SHARES OUTSTANDING* 40.8 M

MARKET CAPITILIZATION (Basic) C$136.0 M

MARKET CAPITILIZATION (FD) C$159.5 M

EST. ENTERPRISE VALUE (Basic) C$135 M

 

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http://www.forbescoal.com/news/july072010/

 

Forbes & Manhattan (Coal) Inc. Enters Into Agreement to Acquire Slater Coal (Pty) Ltd.

 

July 07, 2010

 

TORONTO, ONTARIO--(Marketwire - July 7, 2010) - Forbes & Manhattan (Coal) Inc. ("Forbes Coal"), a private Ontario coal mining company is pleased to announce that it has entered into an agreement with the shareholders of Slater Coal (Pty) Ltd. ("Slater Coal") to acquire Slater Coal and its interests in its coal mines in South Africa. The operating mine, known as the Magdelena bituminous mine (the "Magdelena Property") and the Aviemore anthracite mine (the "Aviemore Property" and, collectively, the "Slater Coal Properties") have a substantial resource base of bituminous and anthracite coal. The Slater Coal Properties are located in the Klipriver coalfield, near Dundee, in the KwaZulu Natal Province of South Africa and can be accessed via the N3, N11 Ladysmith and R102 Dundee tarred national highways that run between Johannesburg and Durban, South Africa.

 

Zinoju Coal (Pty) Ltd., a subsidiary of Slater Coal, has 197,000 tonnes of export capacity at the Richards Bay Coal Terminal, which is a deep sea port, 190 kilometres north of Durban along the Indian Ocean. The terminal is the world's largest coal export facility, able to handle large ships and volumes and is accessible to the town of Dundee via the Richards Bay Coal Terminal rail line.

 

For the financial year ended February 28, 2010, Slater Coal (together with its subsidiaries) sold approximately 538,000 tonnes of coal and had consolidated revenue of ZAR263,002,489 (approximately C$35,500,000) and earnings before interest, tax, depreciation and amortization ("EBITDA") of ZAR92,444,839 (approximately C$12,479,055).

 

Both the Magdelena underground mine and the Aviemore underground mine have expansion potential, and as part of its near term plans, Forbes Coal intends to increase total production from existing levels of approximately 0.6 million tonnes to 1.5 million tones of saleable coal per annum. The current spot prices for export thermal coal are in excess of C$90 per tonne (Richards Bay API4 price) and as evidenced by current sales contracts in place with Forbes Coal, domestic prices are close to C$83 per tonne. Anthracite sales prices range from approximately C$80 per tonne to C$160 per tonne, based on product quality and application.

 

The Aviemore underground mine, which was closed in early 2009, is currently being reopened. For the 2011 financial year, the total coal sales from both mines are estimated at close to 650,000 tonnes and the estimated EBITDA is approximately C$23 million.

In April 2010, Forbes Coal entered into an agreement with the shareholders of Slater Coal to acquire all of the issued and outstanding common shares of Slater Coal, a private South African coal mining company that has collieries in production. Slater Coal holds a 70% interest in Zinoju Coal (Pty) Ltd. ("Zinoju") which holds all the mineral rights and prospecting permits with respect to the Slater Coal Properties. The remaining 30% interest is held by the South African Black Economic Empowerment partners. Pursuant to the terms of the agreement, Forbes Coal is required to pay Slater Coal an aggregate of ZAR600,000,000 (approximately C$80,000,000) over a two year period.

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http://www.forbescoal.com/news/march032011/

 

Forbes & Manhattan Coal Corp. Announces Payment of Second Installment for Slater Coal (Pty) Ltd Acquisition

 

March 03, 2011

 

TORONTO, ONTARIO -- Forbes & Manhattan (Coal) Corp. (TSX:FMC) ("Forbes Coal" or the "Company") announces that it has completed the second instalment payment for the Slater Coal (Pty) Ltd. ("Slater Coal") acquisition, pursuant to which Forbes Coal has paid ZAR 119,000,000 to Slater Coal in accordance with the provisions of the amended purchase and sale agreement entered into between Forbes Coal and Slater Coal on August 13, 2010 (the "Agreement") (See Press Release dated September 20, 2010). Forbes Coal now holds a 76.75% interest in Slater Coal.

 

Forbes Coal has paid ZAR 439,000,000 of the ZAR 600,000,000 purchase price payable pursuant to the Agreement. The final instalment of ZAR 140,000,000 (subject to production adjustment) is due on March 1, 2012.

 

In releasing this information, President and Chief Executive Officer of Forbes Coal, Stephan Theron, commented, "This is another significant step towards the ongoing success and growth of Forbes Coal. The management teams of Forbes Coal and Slater Coal have now successfully been integrated and we are working towards further developing the Magdalena and Aviemore mines."

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http://www.forbescoal.com/news/april052011/

 

Forbes & Manhattan Coal Announces 28% Production Increase for January & February 2011

 

Ramp-up Going According to Plan

 

 

April 05, 2011

 

TORONTO, ONTARIO -- Forbes & Manhattan (Coal) Corp. (TSX:FMC) ("Forbes Coal" or the "Company") is pleased to announce that the Magdalena bituminous mine and the Aviemore anthracite mine have produced an aggregate total of 92,640 Run-of-Mine ("ROM") tonnes for the month of January 2011 and 97,638 ROM tonnes for the month of February 2011.

 

Highlights include:

 

Production for the two months is 28% higher than the monthly average for the financial year to date. Since acquiring the assets in August 2010, there has been a 34% improvement in production (excluding December 2010 maintenance period).

A 53% improvement in total tonnes railed for January and February 2011, compared to the preceding 10 month average.

The average sales for January and February reflect a 63% increase in monthly sales compared to the monthly average for 10 months proceeding this period.

President and Chief Executive Officer, Stephan Theron, commented, "The first two months of 2011 shows that our ramp-up program is going according to plan and continues to gain momentum. The numbers are solid and establish a good baseline from which to start the new financial year. Magdalena has successfully started the new continuous miner section, the Talana rail siding in Dundee continues to improve and our increased export sales allow us to benefit from rising international coal prices".

 

Production

 

Monthly production from March 2010 through August 2010 was 71,660 ROM per month. From September 2010 through February 2011 (excluding December which is a maintenance shutdown month) it was 96,111 ROM. The total ROM production for the operation's financial year March 2010 to February 2011 is 933,993 ROM tonnes. Total saleable production for the financial year was 646,540 tonnes at a calculated yield of 68%. The targeted ramp-up schedule continues to gain momentum.

 

Production from the Magdalena bituminous coal mine in 2011 was 79,960 tonnes ROM in January and 79,251 tonnes ROM for February. The Aviemore anthracite mine produced an aggregate total of 31,067 tonnes ROM for the same period.

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http://www.forbescoal.com/news/april062011/

 

Forbes & Manhattan Coal Announces Significant

Offtake Agreement

 

Steady Cash Flow Will Fund Production Ramp Up

 

 

April 06, 2011

 

TORONTO, ONTARIO -- Forbes & Manhattan (Coal) Corp. (TSX:FMC) ("Forbes Coal" or the "Company") has signed a three year offtake agreement for 1.75 million tonnes (total) with Vitol S.A. ("Vitol"), a leading energy trading company. Vitol will be purchasing thermal coal from the Slater Coal properties at market prices.

 

Cash flow from this offtake agreement will fund the continued ramping up of production at its two operating mines – Magdalena and Aviemore. The agreement is initially for three years and will support the previously announced production expansion plans.

 

Forbes Coal intends to transport the coal to the Navitrade Coal Terminal in Richards Bay using its increased rail transport and capacity with Transnet Freight Rail and Grindrod Terminals. Grindrod Terminals provides certain logistical, handling and stockpiling services to shippers in connection with the shipment of bulk cargoes. As per the press release of December 7, 2010, Grindrod Terminals shall provide Forbes Coal with export coal capacity in the Terminal of 600,000 metric tonnes in 2011, 720,000 metric tonnes in 2012 and 960,000 metric tonnes in 2013.

 

"This milestone for Forbes Coal will support our planned expansion into the coal export market. We have seen a steady increase in export prices over the past 12 months, driven by an increase in demand from India. Together with our increased export capacity at Richard's Bay, the Company is on track to establish itself as a mid-tier Southern African coal company." said Stephan Theron, President and Chief Executive Officer of Forbes Coal.

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The Analysts valuations of FMC are significantly lower than what I calculated. Maybe he is betting on significantly higher Coal prices through 2011?

 

fmccomparables.png

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