COALWORKS has appointed advisers after the junior was put in play through billionaire Nathan Tinkler's $2.25 billion deal with Whitehaven Coal. The NSW-based explorer hired Pitt Capital Partners to consider the implications of the Whitehaven-Aston Resources merger proposal for Boardwalk Resources, which holds a 19.9 per cent stake in Coalworks.
The market is expecting the junior to become a bolt-on acquisition once Whitehaven has purchased Mr Tinkler's Aston Resources to create a $5.1bn coalminer, a deal being sold as a merger of equals.
In a separate agreement, Mr Tinkler is selling Boardwalk Resources -- his private mining vehicle -- to Whitehaven.
In addition to the majority stake in the coal junior, Boardwalk has the right to earn a 50 per cent interest in Coalworks' Ferndale project in NSW's Hunter Valley.
...BBY analyst Mike Harrowell said while it could have been a mistake, the inclusion of Coalworks' flagship Oaklands project in the Whitehaven deal -- as one of Boardwalk's contingency earn-in projects -- suggested Boardwalk planned to bid for Coalworks.
"What is very puzzling is that the Boardwalk valuation has been set, without any apparent variation mechanism to allow for it to take Coalworks early. For that reason, it looks like the Coalworks bid will follow a merger between Aston and Whitehaven and then Boardwalk," he said.
The analyst said that, based on the Boardwalk acquisition price, there was an implied value on Coalworks of about $1.54 a share. The junior's shares yesterday closed 4.92 per cent higher at 64c.
The explorer also has other links to Whitehaven and Aston. Coalworks' Gunnedah Basin project in NSW -- a joint venture with Japan's Itochu -- borders one of Whitehaven's assets. Itochu also holds a 15 per cent interest in Aston Resources' Maules Creek project, also in the Gunnedah Basin.
Coalworks chairman Wayne Mitchell said the company's board and management had a strong strategy to be an independent producer and explorer in Australia.
"With that strategy in place we felt it was necessary to bring in an adviser who can assist us in working through our corporate strategies so we can deliver to all of our shareholders the best possible returns," he said.
Mr Tinkler had not been happy with the junior's share price performance and last month, with the help of Macquarie Group and Mathews Capital, used his majority position to overhaul its board.
He also used his 32 per cent stake in Aston Resources to overhaul its board and management, appointing himself as chairman.
Mr Mitchell said yesterday Coalworks had brought company founder David Smith on as a director to strengthen the company's investor relationship with the market but he had been on the board for only a short time when Mr Tinkler overhauled it, removing Mr Smith.
"He hadn't really had a chance to do his job," Mr Mitchell said.
CWK Price at posting:
59.8¢ Sentiment: None Disclosure: Held
