This is a very interesting part of the report:
"Coal value not recognised
A Central subsidiary, Merlin Coal Pty Ltd currently has around 20,000 km2 of mineral act permits and applications, most granted, with an independent report citing over 500 billion tonnes of coal above 1,000m in a JORC viable Exploration Target. Coupled with recent advances in coal beneficiation, underground and open cut mining techniques and an established rail link to Port Darwin, Merlin Coal might have some major upside potential for Central.
Often forgotten, this 635 billion tonnes of coal in its tenements in the Perdirka basin take on a new significance in todays energy-strapped world. While low grade, if the coal can be beneficiated into a mineable and exportable product and there are a number of coal-hungry (Chinese?) potential partners that spring to mind - the value to Central, were these coal assets to be developed, would be significant.
Assuming the target resource of 635 billion tonnes of coal above 1000m is used as a base case and 25% is mineable at a value of $1/tonne, using open cut and underground mining (long wall mining methods have improved recovery at lower cost) based on issued capital the resultant value is significantly above current market capitalisation for Central."
...... about $160,000,000,000
"In short, the coal assets, which have been a sleeper on the Central books, could ultimately be a company maker. One senses, all that would be needed is a small nudge from energy off-takers/buyers and this would change everything. Coal export may not be out of the question but intrinsically some value adding process such as coal gasification and GTL value adding in-situ prior to export might have more potential.
As a comparison, Gina Rhineharts Hancock Coal Pty Ltd, which is spending an estimated $5 billion to develop the Alpha Coal Project in Queensland, has a JORC compliant Measured, Indicated and Inferred resource of 3.9 billion tonnes - a trifle by comparison to Merlin and Centrals 635 billion tonne independent coal resource target. Alpha will also require a new railway at a cost of $2.2 billion to be built to move product to port, whereas Central can access the established rail link to Port Darwin, "
CTP has potentially 40 times more than Gina's resource.(at 25% of mineable resource)
"Pulling the threads together
So John Heughs mantra becomes oil discovery and monetization. Helium discovery and monetization. Either will do to get into production and get cash flows.
However, there is some significant intrinsic value quietly building within Central, not valued by the greater market coal for one. For an experienced operator like Heugh, it would be surprising if he was not working hard on this thread as well.
Were Central to hit it big on all three wells, a valuation north of $10 per share for Central is possible. It would be the oil equivalent of doing a Paladin Energy in oil and gas. A sniff of a commercial find on any of Centrals wells and the current stock price and market valuation - look very light.
Add-in a (discounted) value for coal assets and this would literally catapult the valuation higher, in the process converting Central into an energy growth company category, rather than oil junior."
Ravi
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