apsec put a valuation on CWK at 1.00 currently .60CatalystThe...

apsec put a valuation on CWK at 1.00 currently .60
Catalyst
The recent merger between Whitehaven Resources and Aston Resources has led to speculation that Coalworks could be a takeover target. While it is hard to say how much truth there is to these rumors, Coalworks has recently announced that it has appointed Pitt Capital Advisors to "consider the implications for Coalworks of the Whitehaven-Aston merger proposal upon its 19.9% shareholder, Boardwalk Resources Limited." Given the takeover activity we've seen in the coal sector there is a good possibility that a number of suitors including Boardwalk Resources are running the ruler over Coalworks.
Looking at the company's Ferndale project, Coalworks has completed stage 2 drilling and has commenced stage 3. Results of the drilling should be imminent and we expect a positive announcement of a JORC resource which we believe should lead to a market re-rating of the company's shares.
Financial Performance and Valuation
Since Coalworks is only in the exploration and development stage the company currently does not generate any revenue. For FY2011 the company recorded a loss of $1.55 million compared to a loss of $2.32 million for the previous corresponding period.
Coalworks currently holds $24.16 million in cash and short term investments and has total debt of $17.39 million leaving it in net cash position of $6.77 million. Book Value stands at $75.45 million or 50 cents per share which means the stock trades on a conservative 1.2 times price to book ratio.
We use a sum of the parts valuation method and value Coalworks at $150 million which equates $1.00 per share and provides us with a 40% margin of safety.