Here is my valuation musings from last summer, clearly the coal price and the value of GCM's listed investments has come down since then!
As of June 09 there is a new government in bangladesh. They have announced plans for 10 new coal and gas fired power stations and the coal policy is due imminently.
Some facts and figures on the situation regarding this stock:
Non-Phulbari assets of a little over a £1.35 accounted for by:
20.3m shares of Coal of Africa (a potential 2bn tonne coal play), 210p/share or 83.7p/GCM share
Shares in Regent Pacific Group worth about 7.24p/share (68.867m shares, 0.8HKD/share, 15.5HKD/£, (even Izzy Englander is invested PA in this one)
Cash, £11.6m, 22.8p/share
PeoplesTel stake worth around 14.4p/share
Aura Energy direct stake £0.79m, 1.55p/share
Uranium assets:
The Aura JV licences in Mauritania and Niger, both grassroots and Niger affected by civil war, value: 5p (maybe?)
Grand total ex-Phulbari assets: 134p/share
Valuing the Phulabri asset:
1. 570mt deposit of high quality coking and thermal coal. Open to extension to the south.
2. Production of 12mtpa thermal, 3mtpa coking coal, subject to 6% royalty and 30% tax at $130pt/$300pt would give around $1.55bn after tax profit (assumes $100mpa opex). (current Newcastle thermal coal price is $160)
3. Capex is around $2bn, NPV $13.5bn at 10x earnings.
4. With 50.96m shares in issue, NPV of $13.5bn, (at $1.95/£1) Phulbari is worth £135.8/ share based on existing share capital of GCM at the point of production.
Obviously the question is; is Phulbari likely enough to go ahead?
Bangladesh power situation:
Chronic load shedding (3500MW peak supply versus over 5000MW peak demand)
100% natural gas powered from bangladesh’s own gas fields which haven’t had any investment since 1997
Natural gas supply will start collapsing in 2011 (3 years time)
No local LNG terminals.
Large amount of natural gas is used for industry (clothes, fertiliser) and therefore when the gas supply falls power will be cut, which will put cost pressure on industry and cut government taxes and wreak havoc in hospitals and other aspects of the country.
Bangladesh policy:
M Tamim the Government’s energy advisor has publicly stated the following in the last few months:
