My thoughts are below regrading XAM. Currently has around 327mt of Sub-bituminous coal(Not JORC compliant). Which is basically average grade coal mainly used for power generation. Coal is generally classfied into the following catagories
Also note in each category there are high end and low end products which are generally classified by specifics including moisture,sulfur,heat content.etc Their are a few little know categories as well which i did not bother listing.
XAM also dables in other commodities, although their focus of late has been coal due to the increase in demand and price. Although the price of this kind of coal is nothing like AKM's. Sub-bituminous coal (XAM) is going for around $90.00 a ton must meet certain requirments. Bituminous coal and coking coal (AKM) $210.00 a ton approx.
If XAM decide to follow Nexant Inc findings to use the coal to create CTL (Coal to Liquids) then you could be looking at lot of different avenues. But these processes cost money, they may have the option of also cleaning up their coal by further processing it. e.g lowering moisture and ash content etc.
Also in the same area they have found better quality coal and believe the coal seam continues. I believe they will be focusing on this potential over the coming year. They have drilled only drilled a minimal amount of holes only 5 this year and most where to retest previous results, for retesting. So their is still plenty of upside in that regard as all they will need to do is drill a few more holes to get the resources JORC compliant.
They have stated their is a potential for a billion + tons of material in the current area. Whether that includes the lower grade material and higher grade is not mentioned. I am mainly intrested in the possibility of them finding harder coals and potentialy coking coals at their other license that is near a new rail link.
The conmpany has some heavy cash reserves now, approx 24m . They now need to be smart with the cash they have and use this wisely to create growth for shareholders. Below is their tabled use of funds
Around 12.2m is to be used over the next year on exploration as well as 1.2m for more acquisitions at Galshar. 4.7m to galshar which i think has the most potential to generate growth near term. All in all i think their is alot of upside to XAM and is simply not being supported correctly hense why the price is where it is currently.
I will be looking at taking a position at some point. Another intresting piece of news i heard this morning is that due to the heavy rain here in queesnland coal production may be subdued for sometime. Which will soon flow on to coal price considering we are the biggest exporter of coal.
http://en.wikipedia.org/wiki/Coal (Bottom of page)
GB
XAM Price at posting:
0.0¢ Sentiment: None Disclosure: Not Held
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