MARKETS

Unlocking Linc's value

WITH big announcements in the pipeline, Linc Energy chief executive officer Peter Bond explains the switch to a Singapore listing; the Blair Athol mine and Teresa longwall project-owning New Emerald Coal spin-off; and the forthcoming "coal bounce".

Blair Price
Unlocking Linc's value

Shareholders are expected to overwhelmingly approve the decision to list in Singapore and end the Australian Securities Exchange listing at the extraordinary annual meeting on November 6.

On why Linc won’t maintain its ASX listing, Bond told ILN that dual listings typically didn’t work very well as companies tended to be dictated by their home domicile.

With Linc raising more than 90% of its money offshore and being frustrated with the pace its shares have gained traction on the ASX, the board consulted its major investors.

“The big investors we have in London and New York that we go and talk to are very encouraging of the move,” Bond said.

“So the billionaires we do business with are more than happy with the move.”

While these investors all agreed to shift away from the ASX, a Singapore listing was deemed to be the best fit.

“Some of them would have liked me to shift to the US, some would have liked me to shift to London – everyone has their preferences,” Bond said.

“We researched it and we thought that Singapore would tick all the boxes going forward.”

Bond said the decision was made early as Linc’s four key business divisions were all on the cusp of significant development.

“We have got a number of big announcements coming up, we have got a number of outcomes that we are about to conquer, let’s give ourselves a platform to unlock that value as we announce it,” he said.

New Emerald Coal

While a Singapore-listed spin-off of Linc’s coal assets is expected next year, Bond said a couple of parties were conducting due diligence over them for a possible acquisition.

The assets include the Teresa longwall project in Queensland’s Bowen Basin.

Planned to deliver 8 million tonnes per annum of pulverised coal injection coal over a 28-year mine life, the project has attracted interest from possible buyers in the past.

Bond said Linc had a value on the asset and discussions around that would continue.

NEC was most recently boosted by the $2 purchase of the Blair Athol coal mine assets from a Rio Tinto-led joint venture, with the transfer of tenure the main source of delays to finalising this deal.

While Linc’s plans to reopen the mine centred on a mine life of just over nine years for average output of 2Mtpa of saleable thermal coal, Linc’s “Drummond” tenements over EPCA1228 and EPC1227 about 40km away offer satellite pit opportunities.

Bond said there would be drilling on the Drummond tenements in 2014 but there were signs a very promising satellite pit could be developed with some good coal.

Coal market

Bond said now was a great time to buy coal assets. However, he doesn’t expect coal prices to bounce back to highs of recent years, just to improve a bit.

He said coal project investors were looking for a lower Australian dollar and some improvement on coal pricing, while he expected overall efficiency gains in terms of production costs in the local coal scene to eventuate.

“That is also a trend in the industry,” Bond said.

“You will see the industry get a bit fat and then tighten its belt and drive itself back to profitability.

“It’s done that at least three times in my lifetime so I am sure it will continue to do it.”

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