Independent take on Belvedere

WHILE the fair market valuation process for Aquila Resources’ 24.5% stake of the Belvedere hard coking coal project has fallen apart, Mine Life senior resources analyst Gavin Wendt provides his views on valuing coal projects.
Independent take on Belvedere Independent take on Belvedere Independent take on Belvedere Independent take on Belvedere Independent take on Belvedere

Mine Life senior resources analyst Gavin Wendt.

Blair Price

Back in June, Vale acquired private resources company AMCI’s 24.5% stake in the Queensland project for $US92 million, and the Brazilian miner was hoping for a similar deal with Aquila.

But Aquila is seeking a higher value on its stake and both joint venture partners are in legal proceedings over the matter.

Wendt is of the opinion it could be reasonable to expect a higher price than $92 million for Aquila’s stake of the Belvedere longwall project.

He is curious to know why AMCI sold its stake for this amount.

“It’s always interesting with these sorts of projects to work out why is somebody selling and why are they selling at that price,” he told ILN.

Wendt said when you start to do the numbers on what are “seemingly comparable” projects, and look at what others are paying for tonnes of coal in the ground, AMCI seemed to have sold its stake at a significant discount.

“These guys aren’t panic sellers, surely.

“Sometimes you have to offload an asset quickly, but it’s a seller’s market – it’s an intriguing one.”

The Belvedere project is just 7 kilometres north-east of Moura and is close to established infrastructure including rail.

Wendt noted the importance of rail and port access in providing confidence on how much a coal project could be worth.

“Access to infrastructure is the real wild card and is the real variable,” he said.

Belvedere already holds 3.87 billion tonnes of resources, including 1.53Bt indicated and 2.34Bt inferred.

The prefeasibility study in March confirmed the viability of a 3.5Mtpa coking coal operation, which will increase to 7Mtpa with a second longwall in 2020.

Construction could start up in 2014, with first coal mined in 2016 and the first longwall installed in 2017.