http://www.coalworks.com.au/The SpeculatorBy David...

http://www.coalworks.com.au/




The Speculator
By David Haselhurst
November 24, 2010
PORTFOLIO POINT: A new year bonus to come for Coalworks shareholders Shares in our NSW mine developer Coalworks Ltd (CWK) touched a new high today of 57.5 as buyers
reacted to the upbeat report chairman Wayne Mitchell delivered to the companys annual meeting late last
week.
The company, with three coal projects underway in NSW, revealed it would reward shareholders in the new
year through the spin-off of its emerging Indonesian coal mining activities.
Coalworks will make an in specie distribution of about 50% of its shareholding in its wholly owned subsidiary
Orpheus Energy ahead of a planned listing on the ASX, expected in March, 2011.
Orpheus is a coal company focused on coal production joint ventures in Indonesia. Ahead of the public float,
an initial capital raising of $3 million is being organised to be followed by a public offer to raise up to another
$22 million. Coalworks will remain a significant shareholder in the spin-off.
Mitchell told the meeting the board had agreed to offer all existing shareholders potentially a bonus issue, with
the ratio still to be finalised.
This would be the companys first dividend to shareholders, he added, with all Coalworks shareholders to be
also offered a priority share allocation in the planned float.
Orpheus has signed a strategic alliance with an Indonesian company, PT Mega Coal International, with a
heads-of-agreement drawn up to develop a thermal and coking coal joint venture (JV) in Kalimantan. The JV
will initially produce at a rate of 500,000 tonnes a year beginning in the first half of calendar 2011. The project
is close to a port site where coal can be barged for export.
Additional Indonesian coal projects were already being advanced under the strategic alliance, he reported,
and predicted further new-term production projects and infrastructure opportunities will soon be announced.
Minarco-Mine Consult (part of the Runge Group) has been appointed to provide independent geological and
engineering verification for what has been labelled the B26 project in Kalimantan.
Coalworks first listed on the ASX in June 2008 and now has 103.8 million shares on issue, about 15% held by
board and management and 25% by institutions. Market capitalisation stands around $58 million.
Since listing it has advanced three projects in NSW:
Vickery South. As reported in this column on November 10, a bankable feasibility study (BFS) is now
underway to develop an open-cut, multiple seam coal deposit on this Gunnedah basin project north-west of
Newcastle with an 18-year mine life in a JV with Japans Itochu Corporation.
Ferndale. The Ferndale project (EL7430), in the Hunter Valley,125 kilometres from Newcastle, with an
exploration target of 350550 tonnes of export quality semi-soft coking coal and thermal coal, where joint
venture partner negotiations are in progress to finance a bankable feasibility study for completion within 2011.
Oaklands. This project in southern NSW has a JORC-compliant resource of 822 million tonnes of coal.
Options under study include export sales through the Port of Geelong, an on-site power station and a coal-toliquids
plant producing 21,000 barrels a day of petrol, equivalent to 6% of Australias daily consumption.
In an investor presentation this month, the company claimed its resources were significantly undervalued,
compared to the market values of 18 other listed coal peers.
Somebody must be listening, for the shares touched a new high this week, up from a years low of 26. We
bought at 27.5 on March 3.