Hi guys, Mihal asked me to post this for him
As you would expect he went to the meeting so this is his first hand account
Many people on HotCCCopper & elsewhere keep throwing up incorrect MC figures, so here it is, with some notes:
Current undiluted MC = 3.8c x 3.1B shares = $118m
Options listed & unlisted = 930m (120m expire October 2011 at 15c/20c - unlikely to be exercised) for all strike prices/dates: see page 9 of "Notice of GM" http://www.conticoal.com/fileadmin/c...t_02.06.11.pdf
ABSA Project Funding announced - $35m for Penumbra
Existing EDF loan payed back via ABSA ($15m - minus amt already paid back in Ferr. coal)
Working capital facility ABSA = $15m
VanMag proceeds = $10m
Cash at hand = $5m (this is just a guess!)
post BEE settlement August:
Cash from BEE2 = $20m
Debt to CCC from BEE2 = $10m
Annual Free Cashflow (not including BEE2 26% share, post settlement August)
approx 500ktpa * $40 on current margins @ Ferreira = $20m x 64% = $12.8m
1.2mtpa * $7pt on current margins @ VlkVk = $8.4m (100% to CCC as BEE partner not yet earning in)
= free cash p.a. approx $21m (not including Ferr. domestic coal). Ferr mine life = approx 2 years
At the GM yesterday it was reported that CCC have just achieved record quarterly export railings to RBCT & record quarterly production at both operating mines. So cashflows should be increasing.
Resources statement here: http://conticoalers.com/2011/06/15/c...s-jorc-update/
Total SA Resources @ 565mt. Next project Penumbra: resources just announced increase of almost 300%
This from recent Madison Williams report on CCC:
Recent M&A transaction confirm implied valuation. Recent M&A transactions highlight the value of Continental?s asset base. On May 4, 2011 Optimum Coal announced a deal to pay ZAR 420 ($US60m) million in cash for Umcebo Mining?s two prospecting rights containing an in-situ coal resource of about 120 Mt of thermal coal. At the implied resource value of US$0.52/t, we calculate a resource-based per share value of CCC shares at A$0.08. As Continental unlocks the value of its extensive resource base and ramps up EBITDA, we would expect the share price to more clearly reflect the underlying value of the company?s assets.
+ potential 2.7Bt shallow resource coal at Botswana*** - drilling to start next month
+ Kenya*** (possible 300mt resource for an outlay of approx $3m - CCC execs confident of being granted rights to one of the 4 coal blocks on offer)
+ potential JV with Eskom on a new project (Eskom to fund all development costs) with Eskom to pay CCC on a cost + basis for domestic coal - as announced at GM yesterday
*** these are/will be held alone by CCC, and BEE partners have no rights over these assets/potential assets
Some more notes from yesterday's GM at UWA (where all 8 formal resolutions were passed by shareholders, including 10:1 consolidation & approval of BEE transaction):
- Late July AIM listing - no share issue on listing
- Increased export railings over last quarter, despite the RB line being closed for maintenance for 20 days
- Only 3% of CCC's total resources being utilized at current operating projects
- Will be releasing quarterly cash flow reports in future
- Op costs for next 2 projects ~ $65pt USD FOB (including the recent 30% increase in rail costs)
- EDF loan (~$14m being paid back via ABSA loan - some already paid back in coal) - still available for CCC to use for future projects, if necessary. ABSA loan has no attaching options/equity etc (non-dilutionary) - gives 3rd party validation
- Eskom looking for broader LT relationships/partnerships in SA - where Eskom will JV & fund all capital costs, if they can secure LT supplies, on a cost + basis. Essential for "social license" & access to rail/port allocations. Looking at developing a new domestic mine with Eskom JV (not on current portfolio).
- Have all necessary permits to start Penumbra, have contractors on site already. Expect to start very soon.
- 95% of BFS at DeWitt finished, including wash plant study. Over July the BFS results will be released.
- Botswana is a strategic asset - will be a while before it's commercially developed owing to lack of infrastructure.
- JB very enthusiastic about Kenya was there two weeks ago, met with almost all govt ministers - confident CCC will get one of the coal blocks, and have good relations with Kenyan govt.
- Rail/Port allocations: still waiting for increased Quattro allocations (they were due 1/4/2011 - a lot of politicking involved). All export coal produced in SA is being sent out (not stockpiled) - just a matter of how it gets out, via own allocations or by using another party's. Opportunities to use Mozambique ports (will be done for Vlakplaats). CCC very confident that rail/port allocations will be available, esp. given its strategic alliance with Eskom to make sure at least 50% of CCC's coal is for domestic market. New BEE partner will raise the company's credibility & increase ease of access to infrastructure. Transnet are spending a lot of $$ to make sure RBCT can raise capacity to 80mt in next 2 years.
- Nationalization issue discussed: SA is an inherently difficult place to do business. CCC has good relations with ANC. Malema has the support of a large proportion of black population who have missed out on the promised benefits of BEE legislation, which has only benefitted a very small elite of blacks. PL says SA mine nationalization will not happen - not workable. Oil & gas is much easier to nationalize, ala Venezuela. Nationalization issue is a mainly means to achieve political goals. But as long as this is a live issue, SA will struggle to attract o/s investment capital. Coal is one of the most secure sectors, given its strategic importance to SA's energy security & value to national growth prospects. There has been a sea change in last few weeks, with many leading figures arguing strongly against nationalization.
- James Leahy's appointment is a big coup for CCC - he has a brilliant reputation in UK & Europe. Was been approached by 30 different resource companies to join their boards, after leaving Mirabaud - Conti was his first choice. James decided to take options rather than a big salary package as he can see the LT value in CCC.
- New BEE (BEE2) group have a massive balance sheet. Received a dividend from parent company of ~$US60m last year. One of the few Community Development Trust Broad Based Black Economic Empowerment (BBBEE) groups that serves the true role of the BEE legislation to benefit local/community groups. BEE2 will fund their 26% share of development costs. BEE2 requested their name not be released until deal with CCC is completed.
- PL & JB both reinforced the message that world class companies like EDF, KORES, ABSA/Barclays & BEE2 have all done enormous, and painstaking DD on CCC, and analysed CCC inside out. You don't get these groups signing deals with CCC if it's a dud!
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