lnc,cnx,cxy valuations, page-16

Bear

All good questions imo ... but first some housekeeping ... reference to 259,201 seconds in an ealier post on Highwayman's thread is in fact 3days and 1 second so it was just a lame attempt at making light of my recent time out in the pasture.

"If the valuations are in fact blue sky, why do you think it is that CXY is valued so much lower??"

The blue sky valuations for CNX and LNC imo have their roots in the obvious sexiness of fertiliser to diesel and syngas to diesel ... both are good stories ... one has a youngish, rogueish, Aussie made good CEO who can sell a great story ... the other has solid management and ties to CSIRO and Incitec Pivot and the sp really took off after that management began selling the story in their announcements. It is undeniable at present that both have fallen well short of their announced goals/plans/timelines and both have now introduced the simpler commercialisation option of electricity generation in the shorter term.

My opinion on CXY being valued so much lower to this point is that their unswerving commercialisation route of electricity generation has been percieved as decidedly unsexy compared to diesel and fertilisers ... there has been an element of Chinchilla Mark 2, 10 yrs on and not much has changed ... time for the old fella to step aside for the new kids on the block if you like.

It looks to me like the market has misread CXY and lessons learnt from Chinchilla ... Walker/Blinderman now have clear wind from CNX and LNC imo ... their preparedness and determination to go straight to Stage 1 186MW at Kingaroy should be seen as their vote of confidence ... no tentative 5MW then 20-40MW early stage trials for these two! I suspect that everything they do and discuss with the Qld Govt clearly relates to a commercial operation, not ongoing trials.

"Do you think it is a genuinely lower asset base(i.e. physical assets), or that (others) are that much better at marketing/hype?"

LNC is the only one of CXY, CNX and LNC to have a genuine asset base to support its capitalisation ... being the surplus mineable coal assets up for sale. Refer to my comments to the first question re marketing.

"If the valuations are blue sky and the market is factoring in projected future earnings, based on experience and knowledge, why is it that CXY are SO far behind?"

In no way is the current valuation for CXY factoring in projected future earnings ... it is kinda wierd, but I think this is because the market has some woolly perception of earnings "potential" for syngas to diesel or fertiliser and perceives electricity to be lower margin unexciting business ... what the market hasn't realised and valued yet is that CXY is but a successful pre-production burn and Qld Govt Policy change away from a world first UCG profitable syngas fuelled power station and a business model that plans to replicate that commercial success, probably whilst advancing the more challenging UCG options like methanation and CTL etc. The other two Companies require significant development work and time prior to commercialisation.

All imo and all in good faith.

Dex