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AQC - AUSTRALIAN PACIFIC COAL LIMITED


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Current market cap $50 million

 

Cooroorah - 17 kilometres north of Blackwater. Their current JORC resource is 107 million tonnes of metallurgical coal.

 

For In-situ coal resources the following assumptions may be reasonable:

 

$0.50 for thermal coal

 

$1.00 for coking coal

 

 

At a minimum their current resource supports 2x their market cap.

 

For comparison Carabella (CLR) currently has a diluted market cap of circa $300million with a JORC resource of 91 million tonnes - naturally with near term upside to this number.

 

This provides AQC a free ?option? on all their other projects of which the most significant appear to be;

 

 

Dingo

 

3 meter coal seem at shallow depth amenable to open cut.

 

Already has a rail running through their project.

 

Not drilled yet but is located in between of Bandanna ( mt) , Macarthur Coal and Aquila.

 

 

Mt Hillalong

 

Advanced Exploration stage

 

22kms West of Rio Tinto Hail Creek Mine

 

Hail Creek runs at 8 million tonnes hard coking coal per annum

 

Drilling this quarter

 

100 million tonne target

 

These projects are all 100% owned, They have a number of other exploration licences however the above projects are their near term focus. Assuming they drill up 100 m tonnes from both Dingo and Mr Hillalong through 2011 we have a 5 bagger from here..

 

Fundingand EPC approvals appear short term priorities..whether it be from capital raising or potential part sell down of Cooroorah. ASX query the other day noted "high level discussions with interested parties". 15% of Cooroorah ?? $15mil? who knows..

 

nonetheless it appears cheap, and is yet to gather much chatter on boards such as this. Which is not such a bad thing i suppose.

 

Not to be taken as advice, simply my general thoughts and comparisons.

 

 

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  • 2 weeks later...

Day JM,

Yes for a while from a tech view. Spewing for not taking the first Breakaway gap on the 6/4 at around 6.5. But very interested again now as it seems to be forming a nice cup with higher handle, higher handle higher price ( old jungle saying ). The target off the C with H is 11. Or if you like a moving off/up from a pullback that filled the last Breakaway gap on the 11/4. Old high is 10.5 almost three years ago, so should not represent large resistance. Weinstein says support/resistance was negligible after four years so there should not be much in a single high after three years especially in a stock that has been as low as 008 in the meantime. Even so resistance at 10.5 would still leave a good profit after a safe entry even as late as nine on good volume. Having said that the first Fib at 38.2 is around 11 so that may be a more attractive target.

The above is a mixture of fact and conjecture.

Below is a mixture of conjecture and fact, concerning a stop loss pertaining to the above conjectures.

IMO the perfect stop would be a close below 7.5 which is the now short term support, to lax say some ! Try a close under the latest low close at 7.8 ? ATR is rough half a cent, so one or two ATR may suit some. Others may go for a percentage, what ever. But he or she who does not use a "set in cement" stop loss should get a week on the rrrr's kicking machine.

 

falko, licensed to rant only, not to give advice.

 

Ps Any constructional comments on my conjectures are welcome.

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Found CLR as an interesting comparison...

 

CLR have a wealth of experience in the Coal industry. CLR's MD Mitch Johnson 35 years in QLD & NSW coal and former head of operations for Anglo coal, Non exec director Rick Gazzard former President of BHP Coal. However you must say Paul Byrne and his team are pretty astute, to pick up the tenements they did, when they did and I have to say there novel approach of off take agreement to neighbouring miners makes sense.

 

 

 

CLR's flagship project Grosvernor West currently has a JORC resource of 69.9MT inferred and 21.8 MT indicated coking coal. Total of 91.7Mt. They have exploration for next 12 months targeting a further 30-45MT for the project and proving resource up to indicated and measured.

 

 

 

AQC's flagship project is JORC 107 MT coking coal inferred resource at Cooroorah which they are focussing on proving up to indicated and measures as well as potential to increase resource size over next 12 months. Shallow open pit mine.

 

 

 

CLR just raised $29 mil through a placement of which $12.8 is flagged for exploration - most of which will be spent on proving up the Grosvernor West project resource to that of measured status prior to feasibility work. This makes me think maybe AQC are potentially going a little light on with $3-4mil planned exploration spend for the next 12 months with only $1.4m for getting Cooroorah up to indicated and then measured.

 

 

 

CLR's other exploration tenaments are large in area size, but do not appear as well located as AQC's MT Hillalong and Dingo which have potential for 90Mt coking and around 50Mt thermal respectively - and this does not include a number of other tenemants which are waiting to be granted. CLR report "target" of up 450MT from other exlopration targets - but all so face a number pending approval.

 

 

 

To complete the comparison we will look at CLR going to full mine development, rail and shipping. 5 kms to the rail line then 200kms to Port Abbott point. There is also the increased risk of substanial capex, rail and port capacity issues etc

 

 

 

It is my understanding given AQC's prime asset location next to the likes of MacArthur Coal, Rio, Aquilla, etc they will have a strategy to "chuck it over the fence" and take a small hair cut in an off-take agreement. I would imagine this strategy will get them to production far quicker than CLR's proposed 2015 timframe.

 

 

 

CLR diluted market cap = $280mil

 

AQC diluted market cap = $50mil come funding requirements

 

This is by no means advice, and would welcome any construction critic...

 

 

 

 

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Sorry JM,

Missed you post. No, still waiting for safer entry around nine. Yesterday arvo made it interesting but today is friday, usually a down day. If it is going to close nine or over this evening on over five million volume, I hope to be in.

Good luck.

 

falko

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Hi again JM,

Read your dissertation on CLR, interesting and well written. CLR had a great run from 106 to 301 in four months but has since gone into distribution down to the 220 area. Next support 190/200. As the policeman might say "nothing to see here" at least not from a tech outlook, not till it turns itself around.

Cheers.

 

falko

 

PS, might have to request a CLR tread before some one goes crook.

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I would have to agree regard your "nothing to see" but from a fundamentals perspective, if AQC appears cheap based on proven resource I would have to say CLR appears expensive in the same breath compared to the likes of AQC and SMR.
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  • 2 months later...

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