giddyupresponses belowYour last comment is the one that rings...

giddyup

responses below

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

- they cant monetise their shares/or ever sell them unless a suitor comes and buys them out as a minority we will also get the same benefit. they also wouldn't be able to take out the company unless a fair and reasonable offer is made as the basso-brussa family wouldnt sell either

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.

- new rail is expensive but the hancock rail eer requested 30mtpa but there ismuch more capacity than that regardless
-with 6bln tonnes and the operations of 100mt of coal per annum then the costs of a new rail per tonne per yr and are not as daunting as they were for a 20mtpa project are there? the economies of scale make it more attractive...not necessary though as rail can be utilised from gvk's route at this stage

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.

- the market isnt paying for any small cap at the moment thats the point i was trying to make..the whole market focus at the moment is tied
-the market will at some stage pay for these resources and as you say botswana has a lot of large multibillion tonne resources but there are only 2 worth of any note cic's (they were taken over by jindal) and afr (which once they get their funding for the power station i dare say they wont be around for much longer either)
-the other nimrodel and hodges are ow quality deep resourfces not worth much to anyone
-so i dont see any white elephants there just two companies who are working to power and rail solutions and in fact afr recently announced 12 different parties in their data room


for the moment the market and punters might attribute little value to these resources but indian/chinese/koreans who need coal will and its a matter of time.