Below is an article on another operating coal mine that has just been sold.This time for under $300 Million.
If after 2 years of marketing Teresa for sale. one is entilted to think that the asking price perhaps is a tad high given G Rhinehard mines sold for appox $400M and Westfarmers achieved less than $300. So for those of you running the numbers on LNC perhaps $500 is way out of the ballpark!!
SYDNEY—Yanzhou Coal Mining Co. of China will pay A$296.8 million, or about US$294 million, to acquire a coal-mining business owned by conglomerate Wesfarmers Ltd. in southwestern Australia, Wesfarmers said Wednesday.
The Premier Coal deal would be the largest Australian acquisition by Yanzhou since its A$3.5 billion takeover of Felix Resources Ltd. in 2009, and the latest move in a takeover drive ahead of the company's planned relisting on the Australian market next year.
Yancoal spent A$222 million last month to acquire privately owned miner Syntech Resources, and earlier this year it paid US$250 million to IMC Resources for a 30% stake in its Ashton coal mine.
Premier produces about 3.5 million metric tons of coal every year, with the majority sold to government-owned utility Verve Energy and smaller quantities going to industrial companies including mineral-sands miner Iluka Resources Ltd.
The lack of current export potential is a significant drawback for the mine, when compared with other recent Australian coal deals.
David Cooke, a Nomura analyst in Sydney, said that based on Premier's financial results, the company appears to have earned about A$40 per metric ton from its thermal-coal sales during 2011. Premier doesn't declare its average sales price.
Export prices have hovered around three times that amount over the past year, but long-term contracts with Premier's current customers will make it hard to access that market without significantly raising production.
"If I were buying it, I would be looking at how much I can ramp up production to lift Premier's effective sale price through winning new contracts," Mr. Cooke said.
In March, India's Lanco Infratech Ltd. bought nearby Griffin Coal out of administration for A$750 million. Lanco has since tried to end contracts with a nearby state-owned power station and private chemicals plant, saying that the business cannot viably sell its coal so cheaply. The Lanco move prompted Western Australia Premier Colin Barnett to threaten to block Lanco's plans to export 15 million tons a year of coal starting in 2015.
Wesfarmers, whose operations also include retail and chemicals businesses, said the acquisition still needs to be approved by Australian and Chinese regulators. If completed, the deal would translate into an additional A$90 million in pretax profit in the company's second-half results, Wesfarmers said.
Yanzhou's domestic mines are mainly based in the coastal Shandong province south of Beijing and are struggling to raise production at the same rate as domestic competitors Shenhua and China Coal. That has driven Yanzhou to pursue a more aggressive overseas acquisitions policy.
Under the terms of Yanzhou's 2009 takeover of Felix Resources, the company must relist at least 30% of its Australian assets on the local exchange by the end of 2012
LNC Price at posting:
$1.96 Sentiment: Hold Disclosure: Held
