prospective buyer of lnc coal deposits

Thinking out loud again! LOL.

Hypothetical

I'm a foreign company in Australia looking to buy a coal tenement/deposit that could secure coal for my country for many many years. It's November 2010. I notice that LNC has a coal deposit for sale for around $500 million and another for $200 million. I do the due diligence, visit the sites including looking into the data room. I think the deposits have potential but the reality is that the infrastructure for these deposits could be as much as 5 to 10 years away and not enough work has been done on the tenements to give me a clear indication of what I am purchasing. I offer $400 million for the lot. No deal!

As a multi billion dollar capped foreign company I decide to now just wait and play the game. In the meantime I am looking elsewhere and discover many other deposits that could also compliment my company at a fraction of LNC's asking price on a cents per tonne of coal but I am still interested in Teresa and Pentland because of its close proximity to very good tenements and the potential resource upgrade.

I then decide to look into the financials of LNC and note that the company has a bit of cash which came from the sale of Galilee. They aren't in a hurry to sell their next assets so it seems. A few months on and I notice that Linc has decided to go in big in the US oil industry. Some move considering they know nothing about oil. They are playing the big boys game now. What do I do? I make a new low ball bid for $200m for both Teresa and Pentland. This is what I think its worth at this point in time (world markets are a mess) and LNC are left to decide. They say I am crazy! They also tell me that they are still drilling and that the real coal resources are much bigger. I wait for some news on a coal resource upgrade. I've been waiting now for 12 months, still nothing!

Given the continuing state of world markets I change my mind again and decide to withdraw my bid. The resource upgrade is taking way too long. I am hoping that I get a call from LNC to explain the delays in the resource upgrade but no call is coming. They are playing the game well or are they?

As time goes on, I also notice that LNC have decided to buy back their shares and I wonder if this is a tactic to make me believe that someone is truly interested in the coal deposit and a deal may be close?

I then decide to have another look into the financials of LNC in October and note that the company will have shortly approximately $30 million in the bank and an increasing debt facility. Currently I work out that LNC have borrowings at around $150 million. What do I do? I still wait.

I'm thinking why would LNC be buying back their own shares when it looks like their cash position will be weak coming into 2012? I can't understand what is happening here. I'll play the game and wait for a call but this time it will be my price and on my terms. Cash is king and I have the cash. I've been waiting close on a year for these coal resource upgrades. This market is now presenting me with much more options. I am now sniffing around at some other coal deposits.

I also notice that LNC's share price has been falling rapidly of late. I'm rubbing my hands now and think I will get a call in the new year. I'm a very patient poker player, I have a huge stack in front of me.

What a story?

If someone has a positive story I'd love to hear it.