Although CAP sold its remaining 20% stake in Hughenden to GUF for $2.5m worth of GUF shares, $1.5 million in cash and a royalty agreement, its important to keep and eye on what is happening up in Hughenden, as the royalty stream the CAP is entitled to covers some 60% of GUFs Hughenden coal project by area.
The shares that GUF issued to CAP (2.184 million shares)where issued to CAP at $1.11, current GUF share price is $1.08.
GUF is currently in talks with the port of Townsville to export between 5 and 10 million tonnes of its production through the port. The port of Townsville has not been utilised by coal exporters in the past. GUF has also requested access to the Abbott Point coal terminal. Discussions on use of rail are also continuing.
The AFR is also reporting that GUF is "poised to annouce a JORC compliant inferred resource at Hughenden of 400 to 600 million tonnes".
Its also interesting to note that Linc Energy is looking to sell its Pentland deposit, which is adjacant to Hughenden.
I think most CAP shareholders were dissapointed with the upfront terms of the Hughenden sale to GUF but we could be very happy in the years ahead when CAP receives a 50c per tonne royalty, capped at 10 million tonnes per year for 20 years.
IMO, it's looking more and more likely that Hughenden will make it into production.
CAP Price at posting:
23.8¢ Sentiment: LT Buy Disclosure: Held
