Linc eyes coal profits

LINC Energy may generate a large windfall from its plans to either sell or demerge its New Emerald Coal subsidiary next year, with the two key coal assets independently valued to a total of $A440 million.
Linc eyes coal profits Linc eyes coal profits Linc eyes coal profits Linc eyes coal profits Linc eyes coal profits

Peter Bond.

Blair Price

While Linc’s previously flagged $2 purchase of the closed Blair Athol coal mine from a Rio Tinto-led joint venture still needs to be finalised, consultancy Snowden has already estimated it to be worth $181 million out of its forecasted range of $121-238 million.

Linc’s long-held Teresa longwall project, also in Queensland, was valued at $259 million out of a broader forecast range of $59-$479 million.

As part of NEC’s plans to revive the Blair Athol mine, Linc CEO Peter Bond said there could be organic exploration growth and acquisition activity ahead to expand this asset’s resources.

“It’s worth noting that the upgrade in coal resource at the Blair Athol mine should allow for a 10-year mine life at a production rate of 3 million tonnes per annum,” he said.

“NEC is well-positioned to become a leading coal production company through a solid development plan and a focus on purchasing low cost coal assets with immediate production capabilities.”

Linc also unveiled the existing resources for Blair Athol, which totalled 46 million tonnes including 12.6Mt in the important measured category.

While a sale of the NEC assets is possible, with Linc revealing that negotiations were underway with “several cornerstone investors”, the other option would be to spin off NEC in a separate Singapore listing.

NEC has other coal assets in the state with the Pentland coal project hosting 266Mt of inferred resources and the Dalby coal project containing 146Mt of inferred resources.

Rio ceased production at the Blair Athol mine a year ago as the downturn in thermal coal prices continued.

NEC managing director and CEO Michael Mapp has previously said he was not in a position to comment on Rio’s reasoning for the sale but suspected it would see benefit by removing the closed mine’s liability off its books.

Just over a fortnight ago, Glencore Xstrata agreed to purchase Rio’s 50.1% stake of the nearby Clermont mine for $US1.01 billion.

Bond said the move to either divest or demerge the coal assets presents exciting opportunities for its shareholders.