Macarthur Coal (MCC) at these prices. Less than a few months ago Peabody offered $16.00 per share for MCC then pulled it back to $15 when the RSPT was announced by Kevin Rudd. With the pullback to $15 there was no settlement of the deal. The stock has since drifted back to the low $11 range after some institutions thought they paid a big price for the MDL 164 tenement in Queensland next to the huge Curragh mine of Wesfarmers (WES), but to me the most strategic assets that attract me to MCC are their unallocated port infrastructure which is worth a lot of money to rivals. There are multiple producers as well as hopeful producers who would love to have port allocation to get their product from the Bowen Basin to Asian markets, but currently have no port allocation. There is a great 1 week buying opportunity in Macarthur Coal as the stock is seeing forced selling from small cap fund managers now that it has been added to the S&P100 Index, and a lot of small cap funds have to sell stocks when they are added into the ASX100 under their mandates. Over the next 4 days untill they exit, the index will provide a once in 6 month buying opportunity in MCC. MCC right now has around 3.1Mpta of spare capacity at Dalrymple Bay, and while they have longer-term plans a few years down the track to use that port allocation, right now they don?t have any projects to use that capacity at Dalrymple Bay, and I am sure larger rivals like Peabody and others see that attraction as well. But MCC also has growth over the next few years as their Middlemount Coal mine comes online 2 years from now, which is what the Abbot Point port and rail allocation is for, and that Middlemount project at full production increases MCC?s share of coal production +33% to over 10Mpta of coal.
MCC Price at posting:
$12.22 Sentiment: Buy Disclosure: Held
