BOWEN Energy has had the coking coal projects of Rocklands Richfield in its sights for some time. By Wally Graham - RESOURCESTOCKS*
Bowen Energy coal tenements. Courtesy Bowen Energy prospectus.
When Queensland-based explorer Bowen Energy listed on the Australian Securities Exchange in February this year the company's managing director Kevin Nichol sent out a strong message to the market.
"We are a serious explorer," he said.
"From day one, it's down to business."
The company's reputation as a serious player was enhanced recently when it completed an investment agreement with Bhushan Steel to raise up to $4.5 million.
Bowen Energy holds the exploration license for several coking coal, thermal coal and uranium leases with the potential to discover major deposits of coal and uranium in the heart of the Bowen Basin in Queensland.
The aim of the new agreement is to allow Bowen to create a strategic partnership that will secure Bhushans Steel's long-term supply of Australian coal for their expanding steel making operations across Asia.
Bhushan Steel is India's third largest steel manufacturing company specialising in steel manufacture for the automotive and white goods industry.
The agreement also provides Bowen with opportunities to capitalise on Bhushan's business experience by involving its participation on the Bowen Board of Directors and, importantly, its capacity to provide working capital to fund the Bowen's stated business strategies, including its takeover bid for Rockland's Richfield (RCI).
"The main point regarding the agreement with Bhushan is that they have provided us with some very important funding," Nichol recently told RESOURCESTOCKS.
"What they're after is for us to source high quality coking coal for them in Australia, wether we have got that under our own portfolio or under somebody else's portfolio.
"Now it's our job to go out and source it, whether it's via a takeover or an acquisition."
When RESOURCESTOCKS spoke to Bowen Energy the company was in the middle of its takeover bid for Rocklands Richfield where its main objectives were two of Rocklands' leases: EPC 890 and the Hillalong Project.
"RCI doesn't have the money to fund any development of those projects where Bhushan most certainly can fully fund the development of both projects," Nichol continued.
"With the EPC 890 project RCI has 153 million tonnes of JORC-compliant coking coal, which is something that we are definitely after. That's a mine at current prices of coking coal.
"The Hillalong Project is 112 million tonne of high grade coking coal, some pulverised coal injection (PCI) and epithermal.
"But it is open cut and it can be developed fairly quickly so it can be up and running within nine months.
"Why Rocklands has been hanging on to it for so long and not done anything with it for 18 months I just don't know."
Bowen Energy certainly provided the shareholders of Rocklands plenty to think about with its takeover bid that it described as "straight-forward and transparent", in comparison to a competing reverse takeover bid that would see RCI become 54% owned and controlled by China Coke and Chemical (CCC), a private Chinese company based in Bermuda and controlled from Hong Kong.
The Bowen Energy bidder's statement for Rocklands said this deal would "substantially dilute" their shareholdings and "load your company up with CCC's debts and then give control of your company to a private offshore investor."
"We've been very fair to the company (Rocklands) there," Nichol said.
"Some months ago we proposed a merger and they knocked it back because the share price was too low and it wasn't attractive to them.
"So we have tried … softer approaches and this hostile takeover is basically the final go.
"Our offer comprised a cash component of 10c plus one Bowen Energy share for every Rockland Richfield share."
Nichol pointed out the offer also gave the Rocklands' shareholders a healthy equity position in a growth-oriented Australian coal and uranium exploration company that has an experienced Australian management team focused on developing a pipeline of coking, PCI and thermal coal projects in the Bowen Basin with a proven reputation for creating value for their shareholders.
After finishing his honours thesis in the energy sector, Nichol worked as a financial analyst for the late Kerry Packer's private company, Consolidated Press Holdings Pty Ltd (now PBL Ltd).
In the mid 1980s he joined North's Stockbrokers, where he learnt his trade in the marketplace as an advisor.
Nichol has been involved in raising funds for several mining floats, as well as associated corporate advisory roles in other listed companies.
He is widely experienced in the equities market with substantial-capital raising experience, in particular in the resource sector.
Executive director Mark Sheppard is an exploration geologist and geochemist with 20 years of exploration experience having worked for BHP Minerals in senior geologist and geochemist positions in Queensland and Western Australia.
He subsequently worked as a consultant to the MIM exploration group up to the Xstrata takeover and has since worked as a contract geologist and exploration project manager for Straits Resources, BHP Billiton and Far West Mining.
Non-executive director Neil Stuart has 38 years of experience in the Mineral Industry, in the commodities of gold, base metals, coal, uranium and various industrial minerals.
Stuart began his career at Utah Development Company in 1968 and worked with the company as a geologist, project geologist and senior geologist until 1977.
From 1979 he headed the coal exploration program in Australia for Marathon Petroleum, which discovered several economic deposits.
Since 1979, he has also managed his own geological consultancy organisation, with work on a variety of commodities – particularly gold and copper – in Australia, Indonesia, Papua New Guinea, Argentina and Mexico.
Bowen Energy also offers exposure to a 100% owned portfolio of highly prospective uranium assets in Western Australia and Queensland, including a known uranium deposit at the Glen Isla project.
The company has begun an initial drilling program at Glen Isla involving 35-45 shallow aircore holes.
Bore holes are expected to vary between 20-80m depth with infill and extensions to this program to be made based on progress and results as they come to hand.
The drilling program was designed to confirm results reported by previous explorers and to establish continuity of the mineralisation further northward into EPM14910.
All holes will be logged by down-hole geophysical techniques with individual geochemical samples scanned by scintillometer to provide real time data.
Selected geochemical samples will be despatched for analytical determination.
"Bowen Energy is a growth company in terms of market capitalisation," Nichol said.
"What I would like to see is a company with a market cap of $50 million by the end of the year. The takeover of Rocklands will achieve that.
"Next year we will be looking for another $100 million on top of that, so you will see this company, over the next 18 months to two years, to be market capped around $150-200 million.
'It's all about growth and having money in the bank and being able to take advantage of situations as they become available. If you don't have the money you can't do this.
"We offered Rocklands' shareholders a fantastic opportunity to get aboard a well managed company that is going forward at a much better rate."
* This report will be published in the September 2007 edition of RESOURCESTOCKS magazine and was commissioned by Bowen energy
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