Sunday, March 31, 2013
COAL Asia Holdings, Inc. has updated the evaluation of its mineable coal reserves within 400 hectares of its coal operating contract (COC) area in Davao Oriental, which is three percent of the total coal concession area of 13,000 hectares. The reserves represent an estimated enterprise value of P4.1 billion at current coal prices to the company.
Given the results of this latest study, Coal Asia is on its way to exceeding an earlier independent valuation by Multinational Investment Bancorporation (MIB), which valued the company at P12.5 billion considering the entire 13,000 hectares in Davao Oriental and Zamboanga Sibugay.
Called the Bactinan and Macopa coal mine deposits, these areas are two of 11 coal bearing basins that have been identified in COC 159 in Davao Oriental.
In a disclosure filed with the Philippine Stock Exchange (PSE), COAL’s subsidiary Titan Mining & Energy Corp. (TMEC) commissioned a full feasibility study through an independent third-party consultant to reevaluate the Bactinan and Macopa coal deposits.
The updated study confirms Titan’s coal proven reserves stands at 5 million metric tons (MT), which is just a fraction of the whole 123 million MT resource and reserve identified in the Philippine Mineral Reporting Code standard geological report done in April 2012. These two blocks were the subject of the preliminary feasibility study done in June 2012. Actual commercial production for these two sites is scheduled in the fourth quarter of this year and is projected to generate 500,000 MT in the first full year of operations.
In terms of mine life, the two sites that comprise the study has a tenure of at least 10 years. But once all the previously mentioned 11 coal basins have been explored and mined as pairs at any given time, the mine life will easily exceed 50 years, the company said.
Coal Asia chairman Harald Tomintz said he is satisfied with the positive results of the feasibility study and how it translates to the company’s valuation.
“Despite the recent volatility of coal prices, the key financial indicators of the Bactinan and Macopa coal deposits, as determined by the feasibility study, speak volumes of the lucrative nature of this project. The valuation of the Bactinan and Macopa deposits alone already represents 103 percent of Coal Asia’s current market capitalization. And this is just the tip of the iceberg, so to speak. There are over 6,000 hectares from the Zamboanga Sibugay site and the remaining 6,600 hectares from the Davao Oriental site. And to add to that, the effective mine life of the whole lot is equal to 50 years. This is not the end of the good news, rather just the beginning,” Tomintz said.
Other indicators like the internal rate of return and payback period for the 400 hectares covered by the Bactinan and Macopa coal deposits are estimated at 115.27 percent and 0.88 years, respectively. (PR) source
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