Your last comment is the one that rings loudest in my ears and I whole hartedly agee with, ie "Noble havent got to their market value by being stupid". So Nobel want to sell us some of the assets of a private company that they own a large chunk in. One reasonably assumes from your comment that they are doing this for their own beenfit and not for benevolence.
While I like the idea of greater scale and agree with you that share scale has benefits, it also has ramifications. For example EER was seeking to produce at around 30MT PA and access the Hancock built rail line to get the stuff to market. At that rate of production the existing EER resources would last for 50 years, maybe more. For the additional billions of tonnes hoped for to be of any commercial value then the combined entity needs to seek substancial increases in its rail and port capacity, upto 100MT PA. That means either asking Hancock for a much greater share of the throughput of their line or building a new one which as we know is very, very expensive.
Remember that the market isn't going to pay for potential revenue in 50 years time. Thats why the SP is so low today. Its not that the coal won't one day come out of the ground or that it won't have buyers but 50 years is after most of us are dead and burried and people are looking at investments in terms of what it will be worth to them, not future generations.
Unless this entire merger thing comes with a plan as to how to moneterise the increased quantities it will be looked at by the market as a big white elephant, just like to large number of multi-billion tonne coal resources in Botswana.
EER Price at posting:
12.0¢ Sentiment: Buy Disclosure: Held
