coal sale still on .... and ubs is still there, page-21

I did not finish my last post properly, because I had to go out. I was saying LNC has other financing alternatives. In this broadcast (link below), the speaker said on two occasions that two vice-presidents of the largest coal company in the USA were visiting Chinchilla to discuss tenement issues. The largest coal company in the USA (and privately in the World) is Peabody. Peabody produces more than half of its coal in Wyoming. Linc has more coal tenement acreage in Wyoming than any other company and has many coal tenements, particularly in the Williston basin, that are suitable for conventional mining. LNC said in its 24 Dec 2009 release that it is looking for a suitable JV partner to conventionally mine these resources.

Join the dots together and you have discussions between Peabody and Linc regarding how they might proceed and on what tenements. The big question is why discuss them in Australia and at the Chinchilla GTL plant. A pre-requisite to a far more reaching deal imo is proof of concept by LNC with regards to gas and liquids production. A little research will show that Peabody has already made significant moves to de-risk its exposure to raw coal by going upstream carrying a green flag. A LNC/Peabody deal makes sense in that regard. Strategically, having Peabody finance the majority of a $billion plant with debt and equity in return for the majority of the revenue makes sense. They can be kept more distant from the technology than a BP or Shell for example and are less likely to delay its progress for strategic reasons. LNC gets to proceed on and make the coal sales when they see fit, rather than under pressure. I would not like the deal if LNC only had resources for one GTL plant. Given they have the resource base in Australia and the USA to put in around 10 modular GTL plants, I think it would pay Linc and its shareholders to not be too precious over seeking to control 100% of the revenue stream from the first plant.

Anyway, right or wrong those are my thoughts and is what I meant when I said too much attention is being given to the coal sale. Left field developments often take people by surprise in such environments. The UCG report due tomorrow may have more importance than we think. At a minimum, a good report will strengthen the hand of the coal sale negotiation team who will undoubtedly be pushing a scenario similar to the one I have outlined.

Cheers
Bleasby

Broadcast link
From memory the first mention of the Peabody execs is at around 13mins into it. The second is much later. I have not checked so I may be wrong on timing.

http://www.brr.com.au/event/64398/linc-energy-limelight-series-presentation?popup=true&wl=76