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Waiting for things to happen

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Vasilis
Contributor
Waiting for a few things to happen New water license due over the next couple of months for Vele, slightly delayed but will be granted. Absolutely no issue. Mooiplaats - 3 parties interested. Expect complete by end of 2015. Thirdly, given strength of balance sheet and being cash rich, CZA looking to acquire asset that will be a cash generator and improve balance sheet further. Given decline in commodity a lot of cheap assets that can potentially be picked up. Yishun were due to complete due diligence this week as part of overall investment of $400m into Makhado. Equity stake just first part of deal. Commodity hysteria seems to have dissipated, Glencore and assets bouncing. Few cut backs in copper etc. definitely a lot of potential great news here on macro and micro level. Great opportunity to add here on pullbacks!
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12 REPLIES 12
SimonPB
Valued Contributor
a falling share doesn't have pullbacks surely ?? it's falling ?!
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Vasilis
Contributor
Sorry mate a wrong choice of a word "pullbacks". I should have used the word "pulldowns". Haha.
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Plonky
Super Contributor
You can try all you like, you cant change the quality of the coal in the ground.... Their yields are terrible and the transport cost kill all profit...
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grannylyn
Occasional Contributor
@Plonky You keep saying the coal in the ground is bad but firstly where are you referring to Makhado or Vele or both? Then I have a question: surely the big investors ie Houhoa + TMM wouldn't plough tons of cash into the project without researching the in
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Plonky
Super Contributor
Both mines are in the same coalfield, so Yes, I am referring to both of them.. The yields are less than 20% which means you have to move a lot of material to get a relatively small return of coal (and that excludes the waste material which is extra above the coal.) I cant say why investors are interested. Sometimes investors are blinded by their eagerness to invest in something that they perceive to be financially viable caused by shrewd reporting. (Just look how the share price jumped recently on news)....Unfortunately they dont always understand the implications of a coal deposit with yields less than 20%....(in some areas the yields are as low as 15%)
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grannylyn
Occasional Contributor
I appreciate the reply Plonky but surely it is the hard coking coal that has the value that they after. Coking coal seems to be a commodity that is sought after for making steel and that area ( Limpopo) seems to be where most of the coking coal is found. Coking coal also carries a higher price than thermal coal so the low yields could still be viable for making profits.
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Plonky
Super Contributor
Yes, you are correct about the higher price of coking coal and it is ideal for the export market.... But to export the coal, it has to be transported to the nearest port... either Richards Bay or Mozambique. The transport costs are one of the points I made earlier as well...Also, if the coal will be exported, it usually has to be "washed" first, which means you get beneficiation costs included for the wash plant.
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grannylyn
Occasional Contributor
Yes I agree with you about the transport costs but if transport costs are an issue then surely Mittal Steel would be a winner by buying local from COal. I also have read that Hebei Steel China has stated that it is going to build a huge steel plant in Limpopo which surely would also seek coking coal for their steel manufacture. This also would offset their costs and bring some profits for COal. Another question: Why is Yishun interested in ploughing in another $400 million into Makhado surely they would not throw money into a dead project?
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Plonky
Super Contributor
Sorry... I am a geologist, so I cant answer the politcal questions.
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Plonky
Super Contributor
@grannylyn... you seem to be convinced that there is an opportunity there, and you have done a lot of research on Coal, so why not take a flyer and buy some shares ??.... there are not a lot of shares trading daily, so that should also be a warning to tre
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Vasilis
Contributor
I have been following this thread for a while but before I continue I must add that I hold shares in COal. I am in favour of what grannylyn has written as I too believe that now is the time that commodities must start rising. With all the QE being pumped in world markets money must surely start rotating and thus will be spent. The world doesn't stand still and more people are born everyday thus more buildings, cars, dams and bridges need to be built. These projects all need steel of some form or another to build plus when completed will also need energy. Coal is still the cheapest and safest albeit pollutant renewable energy source the world has. So if the world is to move on Coal will have to be used at least for the near future. India for example is going to build 80 coal fired power stations over the next decade to supply their millions of people electricity. China has the same problem. Africa has to also generate more electricity for the people and I am sure they won't be using Nuclear Power (too controversial) and dangerous. So Coal is my choice of commodity that will be in demand for the near future. Coal of Africa has both thermal and hard coking coal so it may well be a share to invest in for the future. Coal prices are expected to rise from 2017 onwards.
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Vasilis
Contributor
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