EXL 3.57% 1.5¢ elixinol wellness limited

ferret's stock to watch: excel coal limited

  1. 4,756 Posts.
    Ferret's Stock to Watch: EXCEL COAL LIMITED
    08:33, Thursday, 11 November 2004


    Sydney - Thursday - November 11: (RWE)


    Excel Coal which only listed in May has been a big market winner
    for investors and looks highly prospective with coal prices ready to

    Shareholders who were lucky enough to receive an allocation of
    shares have more than doubled their money.

    As chairman Roger Massy-Greene pointed out at the annual meeting
    Excel is not your average company.

    He drew shareholders attention to one of the things that
    distinguishes Excel from others - it is that all of the directors have
    significant investments in the company.

    "Most of Excel's management team and many of our employees and
    contractors' employees are also shareholders.

    "Their investments speak well of the company and its future, " Mr
    Massy-Greene declared.

    Another feature is that the climate for the sale of coal world
    wide couldn't be better with demand continually on the rise and producers
    asking more for their product.

    Two Australian majors in the coking coal market have been
    negotiating a price well over $US130 a tonne for hard coking coal for
    JFY2005/06 shipment.

    Industry expects higher prices

    Companies have already raised prices to $US95 tonne from the
    previous level of $US57 tonne.

    Market optimism is centred around Indian and Brazilian
    steelmakers keen to lock in supplies for for 2005 at prices well above
    $US100 tonne.

    At the annual meeting managing director Tony Haggarty has
    reiterated that the company's first earnings guidance in the prospectus
    will be exceeded for the year ended 30 June 2005.

    Chairman Roger Massy-Greene also talked to shareholders about
    expectations and performance.

    The chairman said he proposed to focus on three things that are
    absolutely fundamental to Excel and its shareholders – sales volumes,
    sales prices and cost of sales.

    "Other things also affect our profitability and our share price,
    but these are the key drivers.

    "The company's share price has risen from $2 on listing in May
    this year to above $4 recently.

    "This of course has been the result of rising coal prices and
    expectations for further rises, and perhaps some expectations of prices
    in future at average levels higher than in the past.

    "Perhaps the rise in Excel's share price also reflects some
    growing confidence that we will successfully manage the other two key
    drivers of our share price; costs and the forecast increase in production
    and sales," Mr Massy-Greene suggested.

    On sales, the company has been working on a substantial increase
    in Excel's coal production and sales.

    The prospectus forecast sales from Excel's operations
    for the current financial year (FY 2005) similar to those of last year.

    "We have recently announced two moves that will increase Excel's
    shareholders' equity interest in managed sales above the levels forecast
    in the prospectus.

    "Firstly, we have completed the acquisition of the 25 per cent
    minority interest in Wambo and now own 100 per cent of that operation
    (subject to Sumitomo's net profits interest).

    "Secondly, we have announced a doubling of our 90 per cent owned
    Chain Valley operations to 700,000 tonnes per year,
    commencing at that rate for the second half of this financial year.

    The chairman told shareholders the company has been busy working
    on the expansion plans outlined in the prospectus.

    At Wambo Excel is working on a new rail spur, expansion of the
    open cut mine and construction of a new underground operation.

    Newcastle port capacity has been constrained but we expect that
    PWCS, the coal terminal manager, will be able to continue to increase
    throughput above the terminal's current capacity.

    The prospectus also forecast production and sales from the
    Wilpinjong project will commence by FY 2007.

    Work on the Wilpinjong project is progressing satisfactorily,
    and the company expects to produce coal from this mine during FY 2007 to
    supply Macquarie Generation.

    The chairman also disclosed the reorganisation in the ownership
    of Excel's Cosila project in Venezuela.

    Excel has recently taken full management control of this project
    and we expect it to commence production during FY 2007, subject to
    obtaining satisfactory financing for the development.

    The company has also acquired a 51 per cent stakein Millennium
    Coal Pty Ltd.


    Shares of Excel yesterday rose 12 to $4. 78. Rolling high for the
    year has been $4.84 and low $1.88. Dividend is 6 cents a share to yield
    1.26 per cent.

    In its quarterly report to September 30, Excel outlined the
    following highlights.

    * Coal sales and saleable production for the quarter ending
    September 30, 2004 (Q1 FY 2005) were above Plan and above the Q1 FY 2004

    * Sales revenue for Q1 was ahead of Plan and Prospectus
    forecasts. Cost of sales for Q1 was in line with plan and, except for NSW
    Government royalty, consistent with the Prospectus.
    Excel Coal - Managed Mines Q1 (Thousand tonnes) FY 2005 FY 2004
    Percentage variation up 14.2 per cent to 1,682 (1,473 prev); Coal
    Saleable Coal Production 1,267 1,044 +21.4 per cent; coal sold
    Coal Sold 1,152 v 953 +20.9 per cent.

    * Excel acquired the remaining 25% of HunterCoal Pty Ltd, Excel’s
    subsidiary that controls the
    Wambo mine located in the Hunter Valley, taking Excel’s ownership of
    HunterCoal to 100 per cent.

    * Through its 51 per cent owned subsidiary, Excelven Pty Ltd,
    Excel acquired control of the Cosila coal project in Venezuela and TCSV,
    the operator of the Palmarejo export port facility on
    Venezuela's Lake Maracaibo. AMCI and Alpha Natural Resources became
    Excel's partner by acquiring 49 per cent of Excelven.

    * Excel agreed to acquire 51 per cent of Millennium Coal Pty Ltd
    by acquiring 21 per cent from existing shareholders and by investing $34
    million in new Millennium shares. Millennium will use these
    funds to develop the Moranbah opencut coking coal project in Queensland’s
    Bowen Basin.

    * Work continued on schedule for expansion of the Wambo mine and
    the development of the Wilpinjong Project.

    * Additional currency hedging was put in place to fully protect
    expected FY 2005 USD income and to protect approximately 64 per cent of
    expected FY 2006 US$ income. The average rate now in place for FY 2005 is
    US$/A$ 0.6560 and the average rate for the 64% FY 2006 position is


    Strong global demand for metallurgical coal, thermal coal and
    metallurgical coke continues with spot prices for NSW export thermal coal
    are currently around US$52 per tonne FOB compared to the current contract
    price of around US$45 per tonne.

    Recent sales of hard coking coal have been well above US$100 per
    tonne compared to the current contract price of around US$60 per tonne.

    Planned production, sales and costs (except for NSW Government
    royalty) for FY 2005 at Excel's three operating mines are in line with
    Prospectus forecasts.

    Higher coal prices are expected to generate improved margins in
    FY 2005 and accordingly, Excel expects to exceed its FY 2005 Prospectus
    profit forecast.

    Production and sales performance at Wambo were higher than Plan
    in Q1 and were up on Q1 FY 2004.

    Planned sales and production for the balance of FY 2005 are in
    line with Prospectus forecasts.

    Development Consent for the Wambo Rail Project has been received
    from the NSW Government.

    Planning and preparation work is well advanced with the aim of
    commencing construction late in calendar 2004.

    Preparation for the expansion of Wambo opencut mine, the
    development of the Wambo Seam underground mine and the upgrade of the
    coal preparation plant is proceeding as planned.


    Copyright © 2004 RWE Australian Business News. All rights reserved.


    I don't hold EXL

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