From memory, UBS arranged their $70M debt in 2011 and tipped a target price of $80c at that time. In 2010 Macquarie had an 'outperform' rating on GNM right after a declared loss of $11.7M for 2010 coming after a $9M loss for 2009. In Jan 2011 UBS still had a 'buy' recommendation.
In June 2011 UBS declared that GNM is extensively discounted and target price was 90c.
Then came the debate on Carbon Tax and GNM was found to be one of the gassiest mines in oz. The Govt was going to limit assistance to coal miners to their level of prodn. in 2009. Given that GNM was producing bugger all in 2009 and planning an expansion to 6 MT, they were going to take a full hit of the $23 Carbon Tax. Analysts are tipping a $16/T hit, GNM is claiming $4 or some such. Apparently GNM's cash costs are quite high as it is. Maquarie came up with a target price of 30-35c.
Then caame the scheduled expansion efforts including the new longwall which disrupted normal output. So this and next year are going to be see a greatly reduced sales with increased interest cost for a double whammy. Expect the bottomline profits to look rather sad.
Also came the Port Kembla dispute with the wharfies and mining cos which gave some angst about halt to shipping.
And now the delay in longwall installation.
So all in all they aren't having a great time. On the positive side there is half a billion tons of coal under the ground, two longwalls that can turn out monstrous amounts, a guaranteed buyer and a predicted healthy level of coke prices for the near future.
I think people who are bottom drawer this scrip for a year or two will end up pleased. Those who check every 20 min will lose hair and develop wrinkles.
The same UBS changed their mind and declared the share worth
Add to My Watchlist
What is My Watchlist?
