Jump to content
Sign in to follow this  
denarii

GCM Resources (ex Asia Energy)

Recommended Posts

Here is the advfn summary and a news article from today. Does seem to be movement in the right direction! This is my biggest position.

 

ANYWAY DYOR! There have been so many false dawns here in the last two years its feeling like groundhog day.

 

http://www.bssnews.net/newsDetails.php?cat...date=2010-01-26

 

 

http://www.advfn.com/cmn/fbb/thread.php3?i...5&from=4149

 

 

Some facts and figures on the situation regarding this stock:

 

 

Non-Phulbari assets of a little over a £0.60 accounted for by:

 

20.3m shares of Coal of Africa (a potential 2bn tonne coal play)

99m Shares in Regent Pacific Group

74.8m shares of Polo Resources

Cash

PeoplesTel stake worth around 14.4p/share

Aura Energy direct stake £0.79m, 1.55p/share

Uranium assets:

The Aura JV licences in Mauritania and Niger, both grassroots and Niger affected by civil war, value: 5p (maybe?)

 

 

Valuing the Phulabri asset:

 

1. 570mt deposit of high quality coking and thermal coal. Open to extension to the south.

 

2. Production of 12mtpa thermal, 3mtpa coking coal, subject to 6% royalty (this will probably be renegotiated higher) and 30% tax at $70pt/$150pt (these are below current market prices, Aug 09) based on a 12/t cash cost in the Caz report would give:

 

Turnover $1290m

Royalty (10%) $129m

Lifting costs (12/t) $180m

EBITDA $981m

30yr Depreciation of $2bn $67m

Interest on $1bn @ 6% $60m in year 1 *

 

30% Tax $256m

 

After tax profit $597m

FCF ex-D&A $664

 

* excludes $500m convert which could be rolled up

 

3. At coal prices of $70/$150 and assuming a renegotiated 10% royalty then FCF is around $664m. In otherwords they can pay off the senior debt in 18-months - 2 years. The $500m convert would have either a low interest rate and high equity participation or low equity participation and higher interest rate.

 

4. With around 51m shares currently in issue, at 10x FCF @ 15mpta NPV at full operating level is $6.6bn, ($1.6/£1). Phulbari would bt worth £67/ share based on existing share capital of GCM taking 83.3% of the diluted equity base.

 

5. As per the Caz note there is a ramp up period for production, so this is only a rough valuation of the asset at full operating level. It also assumes a certain coal price and a higher royalty rate and does deduct the $230m in estimated expenses for reengineering Chittagong port which probably will not be needed as the coal wont be exported (its not clear on status of the 3mpta of coking coal yet).

 

Caz buy note:

 

http://img228.imageshack.us/img228/5789/gcmcazenovetw6.pdf

 

"Asia Energy’s independent (and well regarded) technical advisers MineConsult and GHD have already derived an ungeared NPV for the project of $2.3bn assuming $50/t coal (at mine gate), $12/t cash costs and a 10% discount rate."

 

Obviously the question is; is Phulbari likely enough to go ahead?

 

Bangladesh power situation:

Chronic load shedding (3500MW peak supply versus over 5000MW peak demand)

100% natural gas powered from Bangladesh’s own gas fields which haven’t had any investment since 1997

Natural gas supply will start collapsing in 2011

No local LNG terminals.

Large amount of natural gas is used for industry (clothes, fertiliser) and therefore when the gas supply falls power will be cut, which will put cost pressure on industry and cut government taxes and wreak havoc in hospitals and other aspects of the country.

 

Awami League Government Action in 2009:

1. They have announced various new power plant plans and have made numerous comments that Phulbari will fire the power plants (see energybangla.com for more details)

2. They have announced setting up a coal mining town and coal mining university in Dinajpur region

3. They have started to compensate and relocate people affected by subsidence in the Barakapuria command zone

4. In early August they went to the World Bank with their new power plant master plan and got a cold response due to the WB's coal policies, however GoB then announced a strategic fuel review, the conclusion of which will likely show domestic coal as the only economic option.

 

Bangladesh policy:

1. Coal policy is being finalised

2. In June two ministers visited a coal fired power station in the UK and visited RWE's open cut coal mines in Germany. RWE is a technical consultant to GCM.

2. Open pit mining is essential for Bangladesh

3. Local people must be treated fairly and compensated.

4. Mines must create local job opportunities including for women

5. They announced that the power supply will be increased from 4100MW to 7000MW by 2012, only Phulbari can deliver the fuel for this.

 

ADB’s prospective underwriting of 10% of the financing package is waiting for government sign off before confirming their support.

 

GCM application is currently under review by the government.

 

Mine financing

The apparent estimated cost of the mine is $2bn, however that includes $230m for port redevelopment which may not have to happen. If GCM puts up $250m cash equity, $500m in a convertible and $1bn in secured debt and equipment finance I believe the capital structure would work and the free cash flow would pay off all of the debt in 18 months - 3 years depending on coal prices. Given that if they sell the CZA stake for £1.50 they will have around $50m cash from this and ignoring the Polo investment and existing cash would only need to raise $200m. This could easily be done with a joint listing in Dhaka and a share placing with the convertible issue.

 

If GCM had a market cap of $1bn (~$2/t), or £12.25 per share prior to the financing, it would imply existing shareholders get 83.3% of the in-production GCM equity.

 

Alternatively the company could be bid for at a valuation of $1-2/t plus £0.60 for other assets, which would give an offer price of £7.58 - £14.58.

 

Other aspects

GCM have applied for a $1bn, 1000MW power plant in Phulbari. The 12mtpa of thermal coal could cover 4000MW of generation, 75% of Bangladesh’s total current demand. To minimise existing shareholder dilution off balance sheet financing options could be explored for this investment.

 

Regarding the 3mtpa coking coal, Essar Group in 2008 announced plans for JV to build a 2mtpa steel mill in Chittagong. There is a rail corridor from Phulbari to Chittagong and GCM invested in PeoplesTel to ensure there would be telecom coverage in Phulbari and along the rail corridor.

 

Even if the Bangladesh government say no to GCM they will be bankrupted by a multi-billion dollar liability for illegally revoking a mining licence in the international courts, it would also be illegal under local laws.

 

Conclusion

IMO the optionality on this stock offers a very compelling risk/ reward profile, but as always timing is uncertain.

 

Longer term there is a high change the share will be taken out by a major, for instance Stephen Dattels is a known asset flipper and the CEO of Peabody Energy used to work with Steve Bywater at Rio.

 

2009 AGM

I haven’t updated anything above, all the above is as of August 2009. However below is a summary of posters notes from the AGM:

 

1. Management upbeat and close to cabinet.

2. Management will be going on the Government of Bangladesh investor road show in the next couple of weeks, which aims to attract portfolio and utility investment into the Bangladeshi power sector.

3. Hard to see there not being positive news flow soon on the back of the road show information.

4. GoB has been visiting the RWE open-cast mines in Germany and were pleased with the education this provided them on the social and environmental impact management.

 

Another thing to remember is this is a prize asset which will almost certainly be bid for after Scheme of Development approval. Steve Bywater used to work at Rio with the CEO of Peabody whom Polo are also close to. Meanwhile RWE could certainly do worse than pick this asset up. Xstrata were previously rumoured to be considering a bid in 2005.

 

Other investments:

1. Coal of Africa could be a Mittal bid target, maybe Chinese bid target if not.

2. Aura JV making progress in Niger and Mauritania towards a JORC resource

3. Polo shares are cheap

4. PeoplesTel, could potentially IPO later on Dhaka stock exchange.

 

UPDATED Dec 2009

 

EdmundJ tries it third (or is it fourth, fifth? lol) time lucky:

 

High-risk GCM a spicy choice

 

http://www.iii.co.uk/articles/articledispl...cle_id=10074533

 

UPDATED Jan 2010

 

 

Share this post


Link to post
Share on other sites

tomorrow could be an interesting day!!!

 

http://www.newstoday-bd.com/frontpage.asp?...=2/2/2010#24289

 

Govt may ask Asian Energy to drop export provision

 

The government is considering holding final talks with Asia Energy for development of Phulbari coal mine having an extractable reserves of 572 million tonnes of coal, enough to ensure the country''s energy security for about 30 years.

The Asian Energy acquires the right for conducting survey on Phulbari coal mine from BHP Minerals, an Australian-base coal company, during the last 1996-2001 tenure of Awami League government.

After completion of the survey, the last BNP government allowed Asian Energy for conducting feasibility study, which was submitted to the government according to the agreement dateline. But all the successive governments could not decide on the issue as there was a movement against the involvement of Asian Energy in Phulbari coal mine development.

The mode of extraction of coal was a focal point of the movement. In its feasibility study the Asia Energy opted for open-cut mining method, which would cause huge socio-economical and environmental losses.

The command area of the Phulbari coal mine is around 6000 hectares of land, which included rural homestead land, agricultural and urban land. According to the Asian Energy feasibility studies, more than 40 thousand people will have to be displaced if the open-cut method is applied for the mine development. Experts, however, disputed with the Asian Energy figure. According to them, more than one lakh people likely to be displaced.

A committee headed by Prof. Nurul Islam of Bangladesh University of Engineering and Technology could not agree about the application of open-cut method. The committee, however, suggested having a pilot project on the open-cut method. Suggestions have been made for opting the underground method, which would reduce social and environmental vulnerability.

But the underground method has been considered as non-viable. It was told that only 10-15 per cent coals out of the total reserves could be extracted if the underground method is applied. There was no national consensus on the open-cut or the underground method, which forced the last BNP and caretaker government to shelve the Phulbari coal mine development issue.

After the installation of the grand alliance government a conference of the non-resident Bangladeshi coal mine experts was held, which was sponsored by the energy division. In the said conference most of the NRB experts opined in favour of the open-cut method. The NRB experts, however, opposed the idea of coal export from the country because it would endanger the country''s energy security.

The government is now conducing road shows in the capital of the western countries for attracting the foreign investment in the country''s energy and power sector development. Questions arose in all such conferences about the government indecision on the Phulbari coal mine development, which prompted the government to reopen the Phulbari coal mine issue with the Asian Energy, the source said.

The government may go ahead with the Phulbari coalmine issue with the Asian Energy if the later agrees to drop the coal export provision from the memorandum of understanding (MoU) signed between the government and the Asia Energy.

Share this post


Link to post
Share on other sites

http://www.newagebd.com/2010/feb/02/front.html#11

 

Asia Energy makes new proposal

for open-pit coal mining

Staff Correspondent

 

The government is considering ‘positively’ a new proposal of the UK-based Asia Energy which offered the government only 10 per cent stake in the Phulbari coal field for operating an open-pit mine, said sources in the government.

Share this post


Link to post
Share on other sites
bit of a damp squib today! at least the volume was good though.

 

Looking better today, though.

 

Thanks for the heads up.

 

I did a bit of research on the back of your recommendation and made a small punt (15K) at 105p.

 

Currently 111p.

 

Happy so far....think I'll sit it out for a while. It shows promise.

 

Share this post


Link to post
Share on other sites
ft aplhaville - market chatter pages

 

They seem to take a particular dislike to one of the posters on iii

 

http://ftalphaville.ft.com/blog/2010/01/19...rkets-live-165/

 

The FTalphaville kids (don't know their age) have several times been noted to spit their dummies out against anyone or any share performance that does not suit their call i.m.h.o

 

Just ask the ardent followers of GKP for instance, who they infuriated calling it wrong all the way on GKP's share price ascent to glory last year ;)

Share this post


Link to post
Share on other sites
not a bad day today! ADVFN and III boards are the best place to keep up to date on GCM on tho. B)

 

Have checked out iii board.

 

From what I can gather reading through some of the recent posts, you appear to post there under several aliases and generally make a nuisance of yourself - disruptive and with little of value to contribute.

 

Still, it appears from a recent post by Golfguy that you have been tracked to G.E.I.

 

Golfguy's post at 11.40 today, 17th Feb 2010.

 

http://www.iii.co.uk/reg/profile/public/?t...9c5d36e18bdf2e5

 

I hope your shenanigans on iii don't give G.E.I a bad name.

Share this post


Link to post
Share on other sites
Have checked out iii board.

 

From what I can gather reading through some of the recent posts, you appear to post there under several aliases and generally make a nuisance of yourself - disruptive and with little of value to contribute.

 

Still, it appears from a recent post by Golfguy that you have been tracked to G.E.I.

 

I hope your shenanigans on iii don't give G.E.I a bad name.

 

 

Completely agree - just showed what a manipulating idiot he is. Don't know how many aliases he has on the iii but it is school holidays this week so can only assume he's nothing better to do. Now just a sad pathetic loser who a lot of people have lost all respect for.

 

Well done kent paul, denarii or whatever alias you're going by today. Please leave iii and go and do some homework.

Share this post


Link to post
Share on other sites
Completely agree - just showed what a manipulating idiot he is. Don't know how many aliases he has on the iii but it is school holidays this week so can only assume he's nothing better to do. Now just a sad pathetic loser who a lot of people have lost all respect for.

 

Well done kent paul, denarii or whatever alias you're going by today. Please leave iii and go and do some homework.

 

Hello, and welcome to GEI.

 

I think you will find that the quality of debate and contributions at GEI is excellent. Do take time to look around the board now you are here.

 

I am only sorry that you arrived here through such a negative referral.

 

Best regards,

 

MTS

 

 

Share this post


Link to post
Share on other sites
Have checked out iii board.

 

From what I can gather reading through some of the recent posts, you appear to post there under several aliases and generally make a nuisance of yourself - disruptive and with little of value to contribute.

 

Still, it appears from a recent post by Golfguy that you have been tracked to G.E.I.

 

Golfguy's post at 11.40 today, 17th Feb 2010.

 

http://www.iii.co.uk/reg/profile/public/?t...9c5d36e18bdf2e5

 

I hope your shenanigans on iii don't give G.E.I a bad name.

 

 

Completely agree - just showed what a manipulating idiot he is. Don't know how many aliases he has on the iii but it is school holidays this week so can only assume he's nothing better to do. Now just a sad pathetic loser who a lot of people have lost all respect for.

 

Well done kent paul, denarii or whatever alias you're going by today. Please leave iii and go and do some homework.

 

 

oh i admit it, i post under a total of 10 different iii user names and i make a point of conducting facile arguments between my various aliases all day.

 

only joking, of course those are other iii users making a pathetic attempt to understand the stock. my all time fave comment is when a small trade goes through someone suggesting its market maker morse code. do these yokels not think MMs have phones?

 

ps looks like its heading under a £1

Share this post


Link to post
Share on other sites

have topped up. although thinly bid there is news flow from bangla ding dong and cza is a bit of a wild card with the chip good year rumours. better in than out IMO

 

that is all

 

Share this post


Link to post
Share on other sites
have topped up. although thinly bid there is news flow from bangla ding dong and cza is a bit of a wild card with the chip good year rumours. better in than out IMO

 

that is all

 

 

Funny how after a few days of deramping, voting bullish posts down and making a general nuisance of yourself with your numerous aliases, it would appear your attempts to manipulate the price lower have succeeded enough for you to buy some. And if my magic all the negativity disappears. Hopefully, people will realise you're just a back office monkey and will have lost whatever respect they had for you with your childish antics.

Share this post


Link to post
Share on other sites
Funny how after a few days of deramping, voting bullish posts down and making a general nuisance of yourself with your numerous aliases, it would appear your attempts to manipulate the price lower have succeeded enough for you to buy some. And if my magic all the negativity disappears. Hopefully, people will realise you're just a back office monkey and will have lost whatever respect they had for you with your childish antics.

 

well donkey, i dont have multiple aliases and i dont vote down posts. just because a stock is going against you and you cant handle it, doesnt mean you have to blame someone else when the truth is it boils down to your own self inadequacy.

Share this post


Link to post
Share on other sites
added a few more today as well.

 

 

Well, it's good to see that kentpaul, alias gcmbull, alias whoever, is now offering some constructive comments on the iii board.

 

It is interesting to note that you, and all the other aliases which you deny, have the same problem with their usage of the English language - they are all incapable of using punctuation or capital letters at the beginning of sentences and for the 1st person, singular pronoun.

Share this post


Link to post
Share on other sites
Well, it's good to see that kentpaul, alias gcmbull, alias whoever, is now offering some constructive comments on the iii board.

 

It is interesting to note that you, and all the other aliases which you deny, have the same problem with their usage of the English language - they are all incapable of using punctuation or capital letters at the beginning of sentences and for the 1st person, singular pronoun.

 

do you only post when you are suffering from PMT?

Share this post


Link to post
Share on other sites
oh i admit it, i post under a total of 10 different iii user names and i make a point of conducting facile arguments between my various aliases all day.

 

I had a look at the iii board and obviously denarii posts there under the kentpaul name - we know denarii to be kp because of the seeking alpha reference

 

However looking at the iii board there are no current / recent or even previous posts from denarii that I can trace. There might have been some history as I found some reference to a denarii that was a bit historic

 

As to the other reference/username the iii member made it is really his allegation only, no evidence seems to be around to back it up?

 

So I guess I give denarii the benefit of the doubt.

 

Unless I have missed something - anyone want to fill me in or can we let it rest?

Share this post


Link to post
Share on other sites
I had a look at the iii board and obviously denarii posts there under the kentpaul name - we know denarii to be kp because of the seeking alpha reference

 

However looking at the iii board there are no current / recent or even previous posts from denarii that I can trace. There might have been some history as I found some reference to a denarii that was a bit historic

 

As to the other reference/username the iii member made it is really his allegation only, no evidence seems to be around to back it up?

 

So I guess I give denarii the benefit of the doubt.

 

Unless I have missed something - anyone want to fill me in or can we let it rest?

 

 

Let it rest....no value in muck-raking yesterday's poo-pile! Onwards and upwards! Tomorrow is another day! And all that kind of stuff......

Share this post


Link to post
Share on other sites
Guest
You are commenting as a guest. If you have an account, please sign in.
Reply to this topic...

×   Pasted as rich text.   Paste as plain text instead

  Only 75 emoji are allowed.

×   Your link has been automatically embedded.   Display as a link instead

×   Your previous content has been restored.   Clear editor

×   You cannot paste images directly. Upload or insert images from URL.

Loading...
Sign in to follow this  

×