stock to watch

Ferret's Stock to Watch: HUNNU COAL LIMITED
09:49, Friday, 11 March 2011

LOCAL EXPLORER NOW HAS A THAI PARTNER IN MONGOLIA

Sydney - Friday - March 11: (RWE Aust Business News)
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OVERVIEW
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Just before Christmas, the Ferret's interest was aroused by a
small company called HUNNU COAL which believes it become a major force in
the exploration and development of coking and thermal coal deposits in
the world-class South Gobi and Middle Gobi coal provinces on the edge of
Mongolia.
George Tumur, managing director of Hunnu, disclosed at the time
that the study for transportation and logistics to deliver Unst Khudag
coal to the Mongolian-Chinese border was at an advanced level.
He said options for acquiring a spur rail line at the Choir
railway station area or building a short spur rail line with a loading
facility were being studied.
Mr Tumur revealed that the company's independent consultants were
finalising an initial resource estimate for the Unst Khudag deposit.
Meanwhile, this week Hunnu Coal announced a strategic
partnership with Banpu plc which it said will benefit both parties for
the long term.
Banpu will acquire 30 million shares in Hunnu through a private
placement at $1.50 per share for a total consideration $45 million.
It will become Hunnu's largest shareholder with 12.39 per cent of
share capital.
Banpu will nominate a representative to the Board of Hunnu and
support management with the development of Hunnu's coal projects in
Mongolia.
Banpu CEO Chanin Vongkusolkit said that Banpu is seeking to be a
long-term player in both the growth and development of Hunnu and the
Mongolian coal sector.
He declared that the Mongolian coal sector has great potential,
with extensive coal deposits and rapidly developing infrastructure.
Mongolia's close proximity to key coal export markets such as
China makes it an attractive investment destination.
A strategic partnership with Hunnu is a lower-risk way for Banpu
to familiarise itself with the Mongolian coal industry.
Establishing a strategic alliance in Mongolia is part of Banpu's
strategy to expand its position in key Asia Pacific markets.
"We are strongly supportive of Hunnu's management team and its
current strategy," he said.
"The alliance will allow Banpu and Hunnu to share operational
expertise, with Banpu representation on the Board allowing Banpu's
expertise to benefit Hunnu at the highest level," Mr Vongkusolkit said.

SHARE PRICE MOVEMENTS
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Shares of Hunnu Coal yesterday slipped 5c to $1.33. Rolling high
for the year is $1.45 and low 43c The company has 182.5 million shares on
issue with a market cap of $242.5 million.

About Banpu
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Banpu is a Thai stock exchange listed company which owns
operating coal mines and power generating assets across Asia, with a long
(25-year) track record of growth and operational performance.
Banpu has successfully adopted a best practice management
philosophy and culture built on international principles of corporate
governance, transparency and social responsibility.
Banpu's strategy is to grow coal sector investments and
operations in the pan]Asian region, in a sustainable fashion, through
organic growth, acquisitions and joint venture partnerships.

BACKGROUND
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Hunnu Coal was incorporated in Australia for the purpose of
acquiring and developing coal projects in Mongolia.
It was listed on February 12, 2010 and has its headquarters in
Perth.
The company operates in Mongolia through its subsidiary company
Hunnu Resources LLC, a Mongolian incorporated company.
Through a series of acquisition and joint venture agreements,
Hunnu has built a diverse portfolio of exploration tenements spread
throughout the various coal basins of Mongolia.
The company considers these tenements to be prospective for
high-quality coking and thermal coals able to be developed for both the
domestic and export markets.
Hunnu Coal is positioning itself for increased demand for coal
with a pipeline of unique exploration and development projects in
strategic locations that will help to provide for future growth and
expansion.
The strategy is to discover and develop high-quality thermal and
coking coal deposits located in proximity to established mining
operations or defined deposits and supported by existing or developing
infrastructure.
These deposits will supply a wide range of coal products for
electricity generation to markets in Mongolia and China.
This strategy has been designed to ensure that the company
maintains a pipeline of projects at varying stages of development.