PORTFOLIO POINT: A spooked market sells down miners many with no operations in Australia and our Coalworks investment droops even as it signs a winning farm-out with Japan.
Many sharemarket punters appeared to be running around like headless chooks this week as they panicked out of the resources market in confusion over proposed tax changes.
On a normal day, one would have expected our investment in Coalworks Ltd (CWK) to hold firm or even advance on news that a farm-in deal worth $11 million had been signed with a Japanese giant to develop the companys 42 million tonne thermal coal resource in the Gunnedah Basin of NSW.
The deal was announced yesterday and Coalworks shares promptly fell from a days high of 49 to a days low of 41 on turnover of close to 770,000 shares. Luckily for readers of this column, we picked up the shares at 27.5 on March 9, so were still well in front and Ill continue to hold them for the present.
A Coalworks subsidiary Coalworks (Vickery South) Pty Ltd signed the farm-in agreement with ICRA Vickery Pty Ltd (a subsidiary of ITOCHU Corporation of Japan, which has extensive experience in the development of coal mines and the global marketing and sale of coal).
Up to $11 million will be spent by the Japanese company at the Vickery South project, where drilling is now under way, to undertake a preliminary feasibility study and complete a bankable feasibility study for an open pit mine by mid-2011.
The 42 million tonne Vickery South Resource is only a modest part of the Coalworks portfolio, which includes Oaklands in southern NSW (with a JORC measured, indicated and inferred resource of 822 million tonnes of thermal coal) and Ferndale in NSWs Upper Hunter with a target resource of 250300 million tonnes of coking/ thermal coal.
CWK Price at posting:
31.0¢ Sentiment: Hold Disclosure: Held
