Date December 13, 2012 - 9:44AM 15 reading now Read later
The Middlemount mining royalty subject of dispute between Nathan Tinkler and his former partner Matthew Higgins could be worth as much as $49 million before tax, analysts say. Former coal buddies on royalties battle
As Fairfax Media reported this morning, private company Oceltip Pty Ltd is entitled to a royalty of $1 per tonne of coal produced at the Middlemount mine, in Queensland's Bowen basin. Mr Tinkler and Mr Higgins are the sole directors of Oceltip, which is 75 per cent owned by Oceltip investments, a Tinkler company, and 25 per cent owned by MG Higgins Investments.
The mine, half-owned by ASX-listed Yancoal Australia and US coal giant Peabody Energy, is ramping up to full production and the existence of the Middlemount royalty was not widely known until today.
Octa Phillip analyst Lawrence Grech, assuming the Oceltip royalty existed but without knowing its exact terms, said the theoretical pre-tax value of a royalty stream of $1 per tonne of saleable coal produced at Middlemount, at a forecast rate of 3.9 million tonnes a year over a mine life of two decades, would range from $41 million to $49 million, after applying a discount rate of 8-10 per cent to adjust for the present value of future income.
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The actual value to a trade buyer of the royalty would be less, he said, given the need to pay tax on the income and the production and coal market risks. Assuming a 30 per cent tax rate, the royalty could be valued at between $28 million and $34 million, he said.
Mr Tinkler's Mulsanne Resources is being wound up over a $28.4 million debt it owes to listed coal explorer Blackwood Corporation.
Last Thursday liquidators Ferrier Hodgson lodged Mulsanne's report on the company's affairs, signed by Mr Tinkler, which shows the company has no realisable assets and liabilities of $28.4 million - including small debts owed to three other Tinkler entities.
A spokesman for Noble Group, which owns 51 per cent of Blackwood, could not confirm on Wednesday whether Mr Tinkler had offered the royalty for sale.
