no brainer

There has been profit taking on coking coal stocks …
The coking coal price continues to hold above the US$300 pt price, having risen almost 300% this year. Most of the coking coal share prices have performed equally well, though there has been some profit taking. Of the stocks we chart Aspire Mining (AKM) has pulled back heavily from its high of 5.5¢, but it is still 500% higher than it was back in June. Atrum Coal (ATU) has fallen back almost 50% from its high of a few months ago but this would have more to do with the failure of a takeover offer to proceed and subsequent personnel changes. Bathurst Coal (BRL) has had a healthy 20% correction but it too is still 500% higher than its 2016 low. Stanmore Coal and Tiger Realm have each done something similar, still being up around 500%. …

but Pacific American Coal has been overlooked

The one major exception on the performance table is Pacific American Coal (PAK). Perhaps there is confusion regarding its direction, having made an investment in advanced nanocarbon (graphene) earlier in the year when coal looked like it was down for the count. PAK’s share price has not responded to the moves in coking coal prices notwithstanding a research note by respected coal analyst, Mike Harrowell, who declared that a fair share price was 30¢ (on a coking coal price of US$140 pt)) (available on the FEC website). Perhaps the current 1 for 8 entitlement issue at 10¢ has dampened demand. Whatever the reason, Far East Capital likes the story. It has underwritten the issue and the author owns 10% of the company. It would not be hard to see the share price kick 2-3x once this issue closes in another week.

Some of the PAK shareholders are there for the graphene as it is the only way to get exposure to Imagine Intelligent Materials Pty Ltd, a company that is progressing well with the commercialisation of graphene in geofabrics. Imagine expects to make its first revenue in Q1 2017. As exciting as Imagine is, PAK sees it more as a smart investment than a change of direction. It will seek to maximise the value of this investment but the greatest tangible asset for PAK at the moment is its Elko coking coal project in British Columbia. That is the reason why FEC made its foray onto the share register. That is the reason why we think the share price is grossly undervalued in the market place. It is a no brainer.


http://www.fareastcapital.com.au/imagesDB/newsletter/WeeklyComm3December2016.pdf