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Hi Blueice--Things are really hotting up Commodity wise. China making big moves.





Sept. 22 (Bloomberg) -- China Investment Corp., the nationÃÆâ€â„¢ÃƒÆ’ƒâہ¡ÃƒÆ’‚¢ÃƒÆ’¢Ã¢Ã¢Ã¢Ã¢â€š¬Ã…¡Ãƒâ€šÃ‚¬ÃƒÆ’…¡Ãƒâہ¡ÃƒÆ’‚¬ÃƒÆ’¢Ã¢Ã¢Ã¢Ã¢â€š¬Ã…¡Ãƒâ€šÃ‚¬ÃƒÆ’…¾Ãƒâہ¡ÃƒÆ’‚¢s sovereign wealth fund, bought a 15 percent stake in Noble Group Ltd. as the Hong Kong-based commodity supplier benefits from ChinaÃÆâ€â„¢ÃƒÆ’ƒâہ¡ÃƒÆ’‚¢ÃƒÆ’¢Ã¢Ã¢Ã¢Ã¢â€š¬Ã…¡Ãƒâ€šÃ‚¬ÃƒÆ’…¡Ãƒâہ¡ÃƒÆ’‚¬ÃƒÆ’¢Ã¢Ã¢Ã¢Ã¢â€š¬Ã…¡Ãƒâ€šÃ‚¬ÃƒÆ’…¾Ãƒâہ¡ÃƒÆ’‚¢s demand for coal, iron ore and soybeans.


Noble will sell $850 million worth of new and existing shares to CIC at 8.1 percent less than the last traded price. The sale includes 135 million shares owned by Chief Executive Officer Richard Elman and 438 million new shares, the Hong Kong- based company said in a statement.


CIC is increasing investments in commodities after losing money on financial firms including Blackstone Group LP and Morgan Stanley. NobleÃÆâ€â„¢ÃƒÆ’ƒâہ¡ÃƒÆ’‚¢ÃƒÆ’¢Ã¢Ã¢Ã¢Ã¢â€š¬Ã…¡Ãƒâ€šÃ‚¬ÃƒÆ’…¡Ãƒâہ¡ÃƒÆ’‚¬ÃƒÆ’¢Ã¢Ã¢Ã¢Ã¢â€š¬Ã…¡Ãƒâ€šÃ‚¬ÃƒÆ’…¾Ãƒâہ¡ÃƒÆ’‚¢s second-quarter profit doubled as China boosted raw material imports to fuel $586 billion of stimulus spending needs.


ÃÆâ€â„¢ÃƒÆ’ƒâہ¡ÃƒÆ’‚¢ÃƒÆ’¢Ã¢Ã¢Ã¢Ã¢â€š¬Ã…¡Ãƒâ€šÃ‚¬ÃƒÆ’…¡Ãƒâہ¡ÃƒÆ’‚¬ÃƒÆ’â€Â¦ÃƒƒÂ¢Ãƒ¢Ã¢Ã¢â€š¬Ã…¡Ãƒâ€šÃ‚¬ÃƒÆ’…âہ“CIC started accelerating its overseas investment pace in the most recent three to six months, they are showing a clear direction, that is from paper assets to commodities,ÃÆâ€â„¢ÃƒÆ’ƒâہ¡ÃƒÆ’‚¢ÃƒÆ’¢Ã¢Ã¢Ã¢Ã¢â€š¬Ã…¡Ãƒâ€šÃ‚¬ÃƒÆ’…¡Ãƒâہ¡ÃƒÆ’‚¬ÃƒÆ’â€Å¡Ãƒƒâہ¡ÃƒÆ’‚ said Zhang Zhiming, director of asset allocation research at HSBC Holdings Plc in Hong Kong. ÃÆâ€â„¢ÃƒÆ’ƒâہ¡ÃƒÆ’‚¢ÃƒÆ’¢Ã¢Ã¢Ã¢Ã¢â€š¬Ã…¡Ãƒâ€šÃ‚¬ÃƒÆ’…¡Ãƒâہ¡ÃƒÆ’‚¬ÃƒÆ’â€Â¦ÃƒƒÂ¢Ãƒ¢Ã¢Ã¢â€š¬Ã…¡Ãƒâ€šÃ‚¬ÃƒÆ’…âہ“If they hold long-term positions in commodity assets, they need a trading house.ÃÆâ€â„¢ÃƒÆ’ƒâہ¡ÃƒÆ’‚¢ÃƒÆ’¢Ã¢Ã¢Ã¢Ã¢â€š¬Ã…¡Ãƒâ€šÃ‚¬ÃƒÆ’…¡Ãƒâہ¡ÃƒÆ’‚¬ÃƒÆ’â€Å¡Ãƒƒâہ¡ÃƒÆ’‚ÂÂ



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Winter Cold is playing havoc with coal supplies in China - possible prelude to a ST spike in coal prices??


Since December, power has been cut or reduced to more than 2,000 factories in Wuhan, Hubei province, to ensure supply for household use, while most parts of the south face electricity shortages, Han Xiaoping, an energy analyst, said yesterday.With power demand surging this winter, coal stocks in 349 power plants across the nation have decreased to around 27 million tons, or barely enough for 12 days of generation, while stocks in the north have declined to less than a week, the Shanghai Securities News reported last month.


Generally, coal stocks should be enough for at least 20 days, Han said.


But in Hubei province, things are much worse. The local electricity supplier faces a shortage of 760,000 tons of coal before March this year, Yang Yong, assistant chief engineer at Hubei Electric Power Company, told China Business News yesterday.


Nearly 2.4 gigawatts, or some 17 percent of the coal-fueled power generation capacity in Hubei, has been shut down due to coal shortage and there is a risk of even more output cuts, the newspaper reported yesterday.


Electricity suppliers in the north are also facing a great challenge with the temperature falling drastically through the earlier part of this week.


In the next 10 days, temperatures could fall to around -32 C in the far north and another cold wave will sweep the region around Friday, bringing gales and severe cold, the national forecaster said.


Experts predicted that the power shortage would last till the end of this winter.

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And this is probably also helping our coal miners today.............



Hong Kong shares rise on coal stocks, HSBC

By V. Phani Kumar HONG KONG (MarketWatch) -- Hong Kong shares advanced Wednesday, led by Chinese coal stocks and market heavyweight HSBC Holdings Plc.


Chinese coal shares enjoyed a boost after Credit Suisse raised price targets on some miners, according to Dow Jones Newswires, with China Coal Energy Co. Ltd.




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CZA is one to watch, was mentioned as a high potential "coaler" this morning in the Eureka report.

Coal of Africa, another Australian with roots in Africa, but one which also boasts impeccable management connections and is being closely followed by British and North American investors. The company will feature strongly at next monthÃÆâ€â„¢ÃƒÆ’ƒâہ¡ÃƒÆ’‚¢ÃƒÆ’¢Ã¢Ã¢Ã¢Ã¢â€š¬Ã…¡Ãƒâ€šÃ‚¬ÃƒÆ’…¡Ãƒâہ¡ÃƒÆ’‚¬ÃƒÆ’¢Ã¢Ã¢Ã¢Ã¢â€š¬Ã…¡Ãƒâ€šÃ‚¬ÃƒÆ’…¾Ãƒâہ¡ÃƒÆ’‚¢s Mining Indaba conference in Cape Town, the first big gathering of the mining industry since last yearÃÆâ€â„¢ÃƒÆ’ƒâہ¡ÃƒÆ’‚¢ÃƒÆ’¢Ã¢Ã¢Ã¢Ã¢â€š¬Ã…¡Ãƒâ€šÃ‚¬ÃƒÆ’…¡Ãƒâہ¡ÃƒÆ’‚¬ÃƒÆ’¢Ã¢Ã¢Ã¢Ã¢â€š¬Ã…¡Ãƒâ€šÃ‚¬ÃƒÆ’…¾Ãƒâہ¡ÃƒÆ’‚¢s crash and recovery. Since the stockmarket reopened last week, Coal of AfricaÃÆâ€â„¢ÃƒÆ’ƒâہ¡ÃƒÆ’‚¢ÃƒÆ’¢Ã¢Ã¢Ã¢Ã¢â€š¬Ã…¡Ãƒâ€šÃ‚¬ÃƒÆ’…¡Ãƒâہ¡ÃƒÆ’‚¬ÃƒÆ’¢Ã¢Ã¢Ã¢Ã¢â€š¬Ã…¡Ãƒâ€šÃ‚¬ÃƒÆ’…¾Ãƒâہ¡ÃƒÆ’‚¢s share price has shot up from $1.90 to $2.36, a hint that a deal might be brewing, such as the introduction of fresh management with big growth plans.

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Investors who like the prospect of buying into potential takeover targets might consider a handful of promising junior coal plays. Already, foreign companies - looking to benefit from surging coal prices and sales to China - have triggered $6.7 billion of coal acquisitions this year.


For those who have been following the coal sector, the $1.68/tonne Macarthur Coal (MCC) paid for a non-developed asset was telling. It represents the sort of multiples junior explorers can expect to receive for proving-up quality Australasian Joint Ore Reserves Committee(JORC)-compliant resources. (Regarded as further along the production probability curve, higher valuations are typically given to JORC resources.)


And as junior coal stocks upgrade their resources, higher multiples are expected to be achieved in line with recent deals such as Adani Enterprises' acquisition of Linc Energy's Galilee basin assets, the Aston resources float, plus the current $2.5 billion takeover bid for Centennial Coal (CEY) by "The Asian Face of Energy", the massive Thai energy company Banpu.


Given some brokers believe that we're close to the bottom of the notable dip seen for the coal industry, there are a handful of junior coal-stocks that are back on the radar. So which ones will be able to capitalise on renewed interest in the sector?


Craig Brown, analyst, Stonebridge Group


Top picks


While Craig Brown believes that Guildford Coal Limited (GUF), Nucoal Resources (NCR) and Stanmore Coal (SMR) offer compelling value on an EV/Resource Basis, he also sees value in the assets that producer Cockatoo Coal Ltd (COK) acquired at low multiples. "The assets of these juniors look 30 to 100 per cent plus undervalued when compared with the acquisitions currently playing out in the market," says Brown.


1. Guildford Coal Ltd (GUF): Brown says that GUF has an outstanding tenement position in excess of 21,000sq km, with multiple basin exposure targeting a range of coals including hard coking, thermal and PCI coal. Since listing in July at 20c, it has jumped 100% to be trading at 40.5c. While GUF doesn't yet have a resource, Brown says that it is sufficiently cashed-up for ongoing exploration. Drilling has already started at the Hughenden project in the Galilee Basin and it looks positive, with the Coal-bearing units approximately 100m shallower than previously anticipated. Having all of its projects within close proximity to rail - giving it potential access to the ports at Townsville, Rockhampton and Gladstone ÃÆâ€â„¢ÃƒÆ’ƒâہ¡ÃƒÆ’‚¢ÃƒÆ’¢Ã¢Ã¢Ã¢Ã¢â€š¬Ã…¡Ãƒâ€šÃ‚¬ÃƒÆ’…¡Ãƒâہ¡ÃƒÆ’‚¬ÃƒÆ’¢Ã¢Ã¢Ã¢Ã¢â‚¬Å¡Ã‚¬Ãƒâ€¦Ã‚¡ÃƒÆ’‚¬Ãƒâ€Â¦ÃƒÆ’¢Ã¢Ã¢â‚¬Å¡Ã‚¬Ãƒâ€¦Ã¢â‚¬Å“ is a distinct commercial advantage. Brown's $0.47 price target is based on 25c/tonne of targeted resource (the company's estimate of what they'll mine). "Guildford has one of the largest tenements in the Galilee basin and we anticipate it will define JORC-compliant Resources over the next 12-24 months, adding significant value," says Brown.


2. Stanmore Coal (SMR): Since its December 2009 IPO Stanmore has successfully proven up a "JORC Inferred" resource at two of its projects, The Range (218mt Thermal) and Mackenzie River (99mt Coking). Stanmore is also targeting an additional 70-80mt at Mackenzie River as well as looking to establish an Initial JORC Inferred Resource on its Emerald project (220mt-290mt Thermal) over the next six months. Following its Mackenzie River announcement early last month, Stanmore's share price jumped from $0.88 to Brown's $1.15 target - based off a 32c/t of JORC Inferred Resource. He expects valuations on an upcoming project to push the price target north of $1.50.


3. Hunnu Coal Ltd (HUN): Operates Mongolia-based thermal and coking projects with 11 rigs in operation and an aggressive exploration program targeting around 650mt and a maiden JORC Resource estimated before year end. Listing at $0.20 in November last year, Hunnu currently trades at a 24 per cent discount to Brown's $1.12 target price, which is based off a 25c/tonne of targeted resource.


4. Nucoal Resources (NCR): Brown believes that as the company moves to a JORC Indicated Resource, it can expect to achieve similar multiples for its asset that is being paid in the market ranging from $0.50-$2.00/t. His price target for Nucoal is $0.27 per share or $0.50/t (it traded at $0.23 at the close of trade on Friday 1st October).


5. Cockatoo Coal (COK): Has successfullybidfor numerous coal assets recently from Anglo American for total consideration of $105 million or $0.41/t (236mt), with approximately 40 per cent of the resources at the Measured and Indicated level. Cockatoo has been producing from its Baralaba mine since acquiring it in the December quarter 2008. The stock currently trades at 41 percent discount to broker targets of around $0.90.


Andrew Harrington, analyst, Paterson Securities


Top picks


To ensure the upside survives well beyond some short-lived share price appreciation, Harrington's favoured junior coal stocks include those better positioned in the capital and infrastructure stakes. These bring to light a different set of coal stocks than those favoured by Craig Brown.


1. Coalspur Mines (CPL): CPL is a thermal coal play with a rare combination of assets close to supporting infrastructure at Alberta, Canada. Based on the positive results denoting export quality coal, the explorer recently commenced a drilling program on its Vista South Coal Project. News on Friday of an $80 million capital raising - of which $36 million is a private placement - to buy coal leases to extend its reach in Canada sent the stock soaring 5% to $0.975.


2. Northern Energy Corp (NEC): NEC is a Brisbane-based, pure coal-play with a portfolio of coking and thermal coal projects in Queensland. The small Colton Mine based within the larger Maryborough coking coal project is expected to be the companyÃÆâ€â„¢ÃƒÆ’ƒâہ¡ÃƒÆ’‚¢ÃƒÆ’¢Ã¢Ã¢Ã¢Ã¢â€š¬Ã…¡Ãƒâ€šÃ‚¬ÃƒÆ’…¡Ãƒâہ¡ÃƒÆ’‚¬ÃƒÆ’¢Ã¢Ã¢Ã¢Ã¢â€š¬Ã…¡Ãƒâ€šÃ‚¬ÃƒÆ’…¾Ãƒâہ¡ÃƒÆ’‚¢s first operating mine, with a mid-2011 production target, subject to approvals. Closing at $0.99 on Friday 1st October, it trades at around a 50 per cent discount to Harrington's share price target.


3. Caledon Resources (CCD): This dual-listed Queensland coking coal producer/explorer acquired the mothballed Cook Mine late in 2006, and has since recommissioned the operation with new underground mining methodology. Numerous drilling programs have also been conducted on nearby Minyango exploration concessions it also purchased in 2006. The share price has soared as much as 16 per cent in recent weeks since it announced that it was in preliminary talks with potential suitors.




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BHP Billiton Mitsubishi Alliance (BMA) has concluded quarterly contract prices for hard coking coal for January - March 2011 at a headline price of US$225/t FOB for Peak Downs/Saraji. This is 7.7% above the prevailing quarterly price of US$209/t. Prices for BMA's second tier brands of coking coal are also understood to have been settled at a similar percentage increase.


We maintain our view that the seaborne hard coking coal market will be structurally tight for the foreseeable future, with upward pressure on prices. Our revised 2Q-11 (April - June) price forecast is US$245/t FOB and our CY2011 forecast is US$240/t FOB. Weather-related disruptions to supply in Queensland imply upward pressure on coking coal spot prices in the short term (but downward pressure on volumes).


We expect semi-soft and low-vol PCI prices to be settled in the next few days (possibly weeks) - we expect smaller percentage gains for these lower-ranking coals than for the premium hard coking coal.

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