I used to work as a coal market analyst, so I have a good idea of coal stock dynamics, even if I have been out of the industry for some time. I would therefore argue that I have found a good coal story for everyone. The stock has appeal for several reasons:
1. The stock holds a very large coking coal resource in Mozambique
2. The company has a 0.5Mt rail allocation, though you can expect this to expand as rail loops are added.
3. There is a bottleneck in the port - which allows only 2Mtpa for non-major users. Not sure how that allocation will be assigned. I will need to find out....so you will have to ask me. But rest assured the Mozambique governments wants to build exports. Its just a question of time.
4. The stock is listed in Australia and on the Alternative Investment Market (AIM) 2nd board of the London Stock Exchange (LSE).
Unquestionably I would have some stock in this if I was a resident of the UK. The stock's name is Beacon Hill Resources (code LON:BHR). I'd argue this stock has been oversold. The ultimate target market for this coking coal is India, which has a robust steel industry. Its a nation that relies on Australia for premium coals, so I expect them to be able to get some lucrative contracts there. I suspect you can probably expect 500% profit, but given the industrial market it will take some time. Its actually a great stock for your super fund. Indian coals are very high in ash, not good coking properties. The coke index of this coal is high - around 9. Indian producers will no likely want to diversify away from Australian dependency, i.e. after floods, but most importantly to turn those pesky Australians into price-takers.
Unfortunately the market for this stock in Australia is too illiquid. The price in Aust should be 5c. but few shares listed there, so its around 11-12c. So if you are a UK resident, this stock is a great story. The company has cash of $21mil after recent raising and its 1.5bil shares are capitalised at $36mil. There is some risk I suspect with port access/allocation delays, but not a major issue for patient shareholders. Logistics can be an issue for coal companies, though I don't think it will be an obstacle for them to move to 1.5Mtpa of saleable coking coal. They will likely stockpile a high-ash 'waste' thermal coal for use as domestic power station feedstock, however I believe that is merely a plan at this point.
News in UK - see here
1. The stock holds a very large coking coal resource in Mozambique
2. The company has a 0.5Mt rail allocation, though you can expect this to expand as rail loops are added.
3. There is a bottleneck in the port - which allows only 2Mtpa for non-major users. Not sure how that allocation will be assigned. I will need to find out....so you will have to ask me. But rest assured the Mozambique governments wants to build exports. Its just a question of time.
4. The stock is listed in Australia and on the Alternative Investment Market (AIM) 2nd board of the London Stock Exchange (LSE).
Unquestionably I would have some stock in this if I was a resident of the UK. The stock's name is Beacon Hill Resources (code LON:BHR). I'd argue this stock has been oversold. The ultimate target market for this coking coal is India, which has a robust steel industry. Its a nation that relies on Australia for premium coals, so I expect them to be able to get some lucrative contracts there. I suspect you can probably expect 500% profit, but given the industrial market it will take some time. Its actually a great stock for your super fund. Indian coals are very high in ash, not good coking properties. The coke index of this coal is high - around 9. Indian producers will no likely want to diversify away from Australian dependency, i.e. after floods, but most importantly to turn those pesky Australians into price-takers.
Unfortunately the market for this stock in Australia is too illiquid. The price in Aust should be 5c. but few shares listed there, so its around 11-12c. So if you are a UK resident, this stock is a great story. The company has cash of $21mil after recent raising and its 1.5bil shares are capitalised at $36mil. There is some risk I suspect with port access/allocation delays, but not a major issue for patient shareholders. Logistics can be an issue for coal companies, though I don't think it will be an obstacle for them to move to 1.5Mtpa of saleable coking coal. They will likely stockpile a high-ash 'waste' thermal coal for use as domestic power station feedstock, however I believe that is merely a plan at this point.
News in UK - see here
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