45c target baillieu

from report released by baillieu on the 29th...

Molopo Australia (MPO) In Brief
Consolidates Bowen Basin interests....

MPO has agreed with its JV partner, Helm, to purchase the latter’s interests in existing CBM fields/production in the Bowen Basin. The consideration is a total $13m involving both cash ($6m) and shares (30m). The immediate impact, providing the deal goes ahead as planned (no pre-emption by Anglo or Mitsui) is to immediately add 80 Pj of 2P reserves to MPO; total 2P reserves 160 Pj. This is a significant addition and comes at a time when MPO is about to assess or
upgrade its 2P reserves, especially in Mungi (2P 58 Pjs/3P 230 Pjs. Prior to today’s transaction, MPO’s equivalent market capitalisation (share price $0.25) per 2P reserves was $2.18/Mscf. We have
increased the issued capital to 740m units allowing for full conversion of options. Using the above, and issuing a further 30m shares with a share price of $0.26, the market cap. rises to $200m which on the new 2P
reserves would equate to $1.25/Mscf.

Prior to today’s announcement, MPO’s market cap to 2P reserves was the lowest in the sector. If it retained the $2.18/Mscf, then today’s transaction translates to a share price of $0.45 . . .
Not a bad value enhancing transaction!
With the BHP/CBM team now firmly in the saddle, we would expect that the program to increase production from this area would accelerate, especially now MPO has a 50% interest. Mungi is already in production and the 2P reserves at the undeveloped Harcourt/
Bindaree project appear likely to be tied back into the Mungi processing facilities.
We expect that BHP Billiton will market its Chinese CBM project in July. The eventual sale price will provide a ready reckoner for the valuation of the present MPO Chinese CBM project. For us, the next company transforming event would be if MPO
announced that the effective stranded 2P reserves at Lillyvale/Oak Park (247 Pjs, MPO share 123 Pjs) could be commercialised through a dedicated local power station. Today’s transaction clearly shows that MPO is on the front foot in terms of consolidating its core asset base. While employing its “A” team on advancing production.

Recommendations
Short Term: Speculative Buy
Risk: High
Price: $0.26
Share Price Target: $0.45
Snapshot
Monthly Turnover (m) 388.2
Market Cap (m) $164.5
Shares Issued (m) 623.6
52 Week High $0.30
52 Week Low $0.03
Sector Energy
Business Description
Molopo Australia Limited is an Australian
resources company involved, particularly, in the
upstream energy industry including the
development of coalbed methane projects in
Queensland, New South Wales, USA and China