FBR Capital on Energy & Natural Resources/Metals & Mining: Winning Streak Continues for CLD; M&A Intensifies in the Coal Land
Tweet
Share
E-mailGet Alerts CLD Hot Sheet
Price: $0.16 --0%
Rating Summary:
4 Buy, 10 Hold, 5 Sell
Rating Trend: = Flat
Today's Overall Ratings:
Up: 8 | Down: 5 | New: 26
Rating Summary:
4 Buy, 10 Hold, 5 Sell
Rating Trend: = Flat
Today's Overall Ratings:
Up: 8 | Down: 5 | New: 26
Join SI Premium – FREE
FBR Capital on Energy & Natural Resources/Metals & Mining: Winning Streak Continues for CLD; M&A Intensifies in the Coal Land
FBR analyst says, "Positive news continue on the M&A front with Japan based Itochu Corp acquiring a non-controlling 20% stake in Drummond's Colombian operations valuing the assets at $8B or at the top end of previously expected range. It was interesting to note that in recent times, Chinese and Indians were considered to be buyers of coal assets across the world and with Japan in the mix the competition for global coal assets is expected to increase over time. We are watching the space melt down with the dollar rising against the weakening Euro on a stalemate to restructure Greek debt, US controversy on its debt ceiling, and continued worries about inflation in China and India. Hence the wall of worry rises and investors are not willing to catch a falling knife. Overall we are buyers of the space since coal fundamentals are solid enough and are valuing the space as if commodity prices will fall about 25-30% from here. We are running our price deck below the forward curve but do not expect a collapse in steam or met coal prices."
"Cloud Peak Energy (NYSE: CLD)(Outperform-rated) wins the West Antelope II Lease. Yesterday after the close CLD announced that it won the BLM lease sale of West Antelope II South Coal tract for $49.3M. The tract contains 56MTs of coal reserves implying an attractive valuation of $0.875/ton. CLD's Antelope mine had an estimated 252MTs of coal reserves at year-end 2010 and added 350MTs of reserves last month through the winning bid for West Antelope North tract at $0.85/ton. We note that CLD has added 406MTs of reserves this far or 42% of the reserves at the end of 2010 addressing the biggest concern (shorter reserve life) of investors."
FBR analyst says, "Positive news continue on the M&A front with Japan based Itochu Corp acquiring a non-controlling 20% stake in Drummond's Colombian operations valuing the assets at $8B or at the top end of previously expected range. It was interesting to note that in recent times, Chinese and Indians were considered to be buyers of coal assets across the world and with Japan in the mix the competition for global coal assets is expected to increase over time. We are watching the space melt down with the dollar rising against the weakening Euro on a stalemate to restructure Greek debt, US controversy on its debt ceiling, and continued worries about inflation in China and India. Hence the wall of worry rises and investors are not willing to catch a falling knife. Overall we are buyers of the space since coal fundamentals are solid enough and are valuing the space as if commodity prices will fall about 25-30% from here. We are running our price deck below the forward curve but do not expect a collapse in steam or met coal prices."
"Cloud Peak Energy (NYSE: CLD)(Outperform-rated) wins the West Antelope II Lease. Yesterday after the close CLD announced that it won the BLM lease sale of West Antelope II South Coal tract for $49.3M. The tract contains 56MTs of coal reserves implying an attractive valuation of $0.875/ton. CLD's Antelope mine had an estimated 252MTs of coal reserves at year-end 2010 and added 350MTs of reserves last month through the winning bid for West Antelope North tract at $0.85/ton. We note that CLD has added 406MTs of reserves this far or 42% of the reserves at the end of 2010 addressing the biggest concern (shorter reserve life) of investors."
Serious News for Serious Traders! Try StreetInsider.com Premium Free!
You May Also Be Interested In
- Viking Holdings (VIK) PT Raised to $82 at Mizuho
- Deere (DE) PT Lowered to $728 at UBS as Agricultural Machinery Cycle Gets Closer
- Ferrovial SA (FER:SM) (FRRVF) Reiterated at Buy by UBS on Winning Bid For Tennessee Project
Create E-mail Alert Related Categories
Analyst CommentsSign up for StreetInsider Free!
Receive full access to all new and archived articles, unlimited portfolio tracking, e-mail alerts, custom newswires and RSS feeds - and more!
