Not sure which broker put out the research (would appreciate someone forwarding a copy), but noticed this on Ozequities today... RIV a buy up to $8.50.
______________________ Riversdale is a "buy", target price $8.50 .. the game is afoot ..
A leading broker retained a "buy" on Riversdale and a target price of $8.50, saying while no details were given of the Brazilian steel producer CSN's acquisition of an initial 14.99% stake in Riversdale with the remaining 1.3% stake (for 16.3%) conditional on FIRB approval, purchased at $6.10 per share, a 6% premium to last night's close, "given Ken Talbot has a 16.5% interest in RIV the CSN purchase appears to be a cross" the broker says.
The broker adds with CSN and Tata owning 35% between them, there are two steel companies with a vested interest in securing coking coal supply. Both have the capital to sink into Riversdale (CSN has a cash war chest of $US5 billion) to develop the projects and the requirement to secure coking coal supply "in a world that we see driving prices up over $US200 per tonne" because of a shortage, the broker says. The broker adds, "With Vale owning the adjacent coal blocks in Mozambique it has always appeared as the natural owner of Riversdale.. We still see Vale as the natural owner of RIV but the question is if/when it launches an offer .. the CSN stake could also force out other parties such as Xstrata, Vedanta, ENRC and Norilsk who would all like to boost their exposure to coal".
The broker adds the major issue remaining is the ability of the company to export coal out of the region. Capital remains the issue, with substantial amounts required to develop a project with enough critical mass and solve the infrastructure. RIV up 32c to $6.04
RIV Price at posting:
$6.28 Sentiment: Buy Disclosure: Held
