Global Coal Management
In the last few days this share has been drifting backwards too. I wonder if the old adage - Sell in May and go away - has anything to do with a few of the shares I have or watch drifting down. These things go in cycles anyway. Nothing goes up in a straight line and also people get fed up waiting for events to unravel themselves like the will they won't they get the go ahead to extract coal in Bangladesh.
GVM which GCM have a stake in are to start a feasibility study on their latest acquisition.
http://www.resourceinvestor.com/pebble.asp?relid=31405
JOHANNESBURG (Business Day) -- Coal and base metals company GVM Metals [JSE:NVM; AIM:GVM], which is quoted on London’s AIM and listed in Australia and Johannesburg, planned to start a feasibility study on its latest acquisition, the Mooiplaats coal project, during the current quarter, it said on Monday.
The company is finalising the purchase of Kelso Mining, whose main asset is the right to take 70% of the Mooiplaats coal project. Mooiplaats is within 2 km of the Camden power station and also close to the Richards Bay coal export line.
Camden is one of the mothballed power stations that Eskom has recommissioned to help meet the country’s rising electricity demand over the next few years. It should supply about 1000 megawatts to help meet demand this winter.
In an investor presentation last month, GVM said it planned to bring into production the 1.2 million tonne a year Holfontein project and the 4.5-million tonne a year Mooiplaats project within the next two years.
Eskom was consuming more coal than it had originally planned and needed substantial new coal sources, GVM said.
In the March quarter, GVM made pretax profits of A$1.8 million (US$1.48 million), mainly from its nickel magnesium alloy business, NiMag. Current exchange rates and high nickel prices suggested NiMag’s outlook for the rest of the financial year was positive, it said.
GVM held A$10.1 million (US$8.33 million) in cash at the end of March after issuing 12.2 million shares to Global Coal Management to raise funds for its South African coal interests.
The company plans to place another 8.3 million shares to finance the purchase of 50% of the Baobab joint venture and 37.35 million new shares to raise funds to acquire the Mooiplaats project, both of which require shareholder approval.
At Holfontein, drilling was continuing to increase the definition of the coal resources and a feasibility study should be completed by the end of the September quarter, management said.
At Baobab, drilling will begin once shareholders have approved the acquisition, while at the Limpopo coal project, GVM has begun talking to infrastructure providers to determine how much coal it can export from a mine on the property.
Commentary
GVM shares have gathered speed since the company took a dual listing on the JSE late last year, partly as the company has issued shares to local vendors of businesses but also as its profile has risen in South Africa. GVM has been actively expanding in the local coal sector where it sees an opportunity to meet Eskom’s growing need for thermal coal.
Initially listed at 240 cents, GVM is currently trading at 620 cents, and has been as high as 790 cents in early March. Its JSE price on Monday afternoon was about 8% higher than the 41 pence prevailing on AIM, based on the exchange rate, which meant it was offering an arbitrage opportunity for lively but small-scale traders. Volumes, which were less than 20,000 a day for the first two months, with sometimes no trade at all for several days, have picked up to a more respectable 30,000 to 100,000 a day, with very few days when it shows no deals.
One of GVM’s stated intentions when it took a listing on the JSE was to use its shares to make local acquisitions and by doing so it has gradually increased volumes. It initially listed its full 76.7-million shares on the JSE, including 20 million shares it was committed to issue for its acquisition of the Limpopo coal project, but it warned that liquidity would be constrained at first because the shares were held on the UK and Australian registers and would take time to migrate to SA.
At the end of March, though, the list of GVM’s top 20 shareholders includes a few that are clearly South African. The second-biggest shareholder, with 13% of the company, is South African Coal Limited. There is a wide range of nominee companies listed as shareholders and a couple of these are quite likely to represent local shareholders.
