Shares in Linc Energy jumped 10% and more yesterday at one stage after a bullish update on its Queensland coal interests.
The shares closed up 5.4% at $1.56, a rise of 8c.
The sharp rise handed a 20c a share profit to some US people who were paid Linc shares at $1.44 each for their stakes in coal leases in the US state of Wyoming.
Linc wrapped up that purchase, announced on Christmas Eve last year, yesterday.
In its main announcement Linc said its planned sale of coal tenements at Emerald, Pentland and Galilee in Queensland was "progressing albeit more slowly than hoped".
It also revealed details of possible mining plans (and one "third party" valuation of one prospect) that it commissioned, perhaps to impress on the market the value of the prospects.
One of the mining plans came from an outside consultant, and two other ‘plans’ were the company’s internal estimates.
It claimed the three prospects could support annual output of more than 36 million tonnes a year of soft coking or thermal coal.
Linc claimed that one prospect, the Galilee area, could see production of 30 million tonnes of thermal coal a year.
"The Company continues to pursue sale outcomes that reflect full and fair value for these high quality assets on behalf of its shareholders. Discussions and negotiations are continuing with a number of overseas interests and Australian based mining houses.
"The interested parties are in some cases negotiating to buy all three assets and in other cases individual assets.
"Some of these negotiations are at a very advanced stage. A written offer for the purchase of all three coal assets has been received from one party and whilst negotiations with that party are now at a very advanced stage, the Company is continuing to progress all potential avenues until a sale(s) is realised.
"The Linc Energy board has insisted that a sizable deposit accompany any signed sale agreement. Accordingly, a considerable amount of time has been spent working through these financial details from the buyers’ side to ensure that ultimately the Company achieves a smooth and successful transaction that serves all parties."
Linc said it commissioned Brisbane-based MineCraft Consulting to complete a Conceptual Mine Development Study for the Theresa (Emerald) resource.
"The study identified a high value underground longwall mine development option yielding 3.8 Mtpa of product coal over a 30 year life of the mine study with approximately 2.5 million tonnes/annum of semi-soft coking coal being produced and 1.3 million tonnes of good quality thermal coal production per annum.
"MineCraft was asked to provide a third party determination of the value of the Theresa resource based on the proposed mine development and their assessment of long-term coal pricing. The conservative central case valuation of the project/asset was estimated by MineCraft to be A$529M (Australian dollar net present value).
"A similar conceptual mine plan is currently being completed on the Galilee tenement by Xenith Consulting however Linc Energy’s own modeling currently suggests a very cost effective long life open cut strip mine, producing 30 million tonnes per annum of low sulphur very good quality thermal coal with strip ratios commencing at approximately 2.5:1.
"The indicative NPV from Linc Energy’s own modeling has the valuation at over A$1 billion (including an allowance for infrastructure, investment into railways etc). Linc Energy will complete a third party valuation at the same time as it completes its conceptual mine plan study.
"The Company has also had a conceptual mine plan study (inclusive from mine face to port) completed by Xenith Consulting for the Pentland tenement.
"The plan shows approximately 3 million tonnes per annum of thermal coal suitable for open cut extraction.
"Pentland is the smallest of the three coal assets both in size, tonnage and opportunity but the Company believes that it remains a good hedge against rising thermal coal prices and has good prospects of a relatively fast commencement of operations.
"Whilst it is not possible to state when the coal sales will be completed, Linc Energy remains locked in negotiations to complete a sale that the Company believes will realise very good value based on continuing levels of interest and the continued strong market demand for thermal and metallurgical coals."
