$Geo Energy Res(RE4.SI) $Golden Energy(AUE.SI)

Current export coal prices likely to stay depressed until the end of 2018, until China’s NDRC comes out with a new import policy
Traders and middlemen are panicking and letting go of stock.
Many are very much willing to negotiate... and the ground level actual FOB prices offered, are still lower than the transacted prices that I found.

When it turns though, it’d also mean that I know it just a tad earlier than the typical retail investor... esp since most of the related parties r not even in SG.
I’m happy to hear traders unloading inventory actually, when coastal plants demand come back on, it’d hopefully be in an under supplied market.

TTI’s way of scuttlebutt-ing means unfortunately, I end up wasting the time of a few real businesses who think they have an end client...
Yea, I know, a bit of an arsehole but ah well, I do what I have to do to get the information I need to have...

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any updates on coal?


Reply to @michaelewanta : You can find them online and on papers. Even other company release.

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Also saw a report mention china coal stockpile dropping to 24 days.

Finally some good news.


Reply to @ThumbTackInvestor : Yes, TTI pointed out the key points. Awesome as usual.

China small mines are too dangerous, outdated, inefficient and polluting. We know that there are many accidents in these small mines and China govt do not like that. Hence the govt is pushing for their consolidation. Small mine is giving way to big one. The govt had set new rules and regulation to provide license only for mines meeting criteria. This is part of the govt effort on the restructuring of the SOE in the energy sector. I understand there are plans to consolidate them vertically. The impact is to control and stabilise electricity cost. In China, the govt always like stability especially in these core prices which will directly affect their citizen. They hate unrest.

Another prong of the China government policy is aquiring key quality assets oversea which we see in Australia. This is to give them a greater control over seaborne trade. With new powerplant technology, they will also be seeking higher calorific coal than the 4200 ones geo and golden is producing.

The general thread in future is for higher quality coal. This explains why geo is looking for higher calorific mine and golden is seeking metallurgy asset in Australia. But please do not overpay for asset. We know the story of stanmore coal when it is a distressed asset.

I will be dispointed if geo acquired a similar 4200 mine or golden bid a lot higher. Yes, golden spent money on a minority stake in gold mine! And sitting on paper lost.

On the bright side, i do see the key demand for geo and golden in future will be developing countries like indonesia, south east asia.

Hence i see period of greater stability of prices in future. Less sudden spike unless unforseen circumstances like weather or economic growth.

Importantly, mine will need to be efficient, and have economic of scale. Like golden mine with current infrasture improvement, they can ramp up production easily. Earning growth will be driven by production growth.

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PSA: (09th Dec 2018)
From my local contacts, cold front hitting both the southeastern and the north cities of China
Sudden plunge in temperatures just started, but forecasted to last only a week (for now)
In the meantime, coal imports still banned in Dec.
Coal stockpiles are likely to drop from the 33 days worth.


I'm sure he gets competitors' random queries. This is all too common.


walau eh... like that also can...
and that person dunno at all... hehehe


Reply to @sysy : Lol yea.
Ah well.
Nvm la, no financial loss to him (except for some time and effort)


Cant believe it. TTI really ShiFu have this kind of connections. What a way...salute.

By the way, they quoted USD$32 per your previous post? That is near to current spot right?


Reply to @ThumbTackInvestor : That is what we called doing homework!

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sorry what's fob?


He thinks that I own a coal mine in East Kalimantan, and that I'm going to spend $1.6mil USD FOB, excluding freight, on 50,000 mt of GAR 4200 coal, cos I need to mix coal to reduce the sulphur levels to <1% to meet China NDRC's requirements......

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$Geo Energy Res(RE4.SI)

NDRC has lifted import ban in Q1 of 2019 (unofficially)
Market uncertainty has diminished greatly, and ICI 4 coal futures have moved back into contango as traders are more optimistic about coal prices in the later part of the year.
Traditional restocking that takes place before CNY in china has NOT taken place yet, volume has dipped as there's a standoff between utilities and importers.
I'm expecting continued improvement in ICI 4 prices from the USD32/mt or so currently, to cross the USD 35 mark.

Risks include the Q4 2018 results, not sure if markets have priced in a production hit for Q4 due to the weather and due to China's import ban.
Also, I'm really not too happy with the undeserved share options given to board members, particularly the IDs.

Took profit recently, but still own 650,000 shares at ave price of $0.154

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$Geo Energy Res(RE4.SI)
Expecting NDRC to lift China's import ban in Q1 of 2019.

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$Geo Energy Res(RE4.SI)

From the posts and comments, it’s obvious that many SHs have been scared shitless. Lol.
But of course.
I’ve gotten quite a few questions, so this post will answer it all. Hopefully.
1stly, why the big drop today?
The clear answer is the big drop in GAR 4200 coal prices.
It’s not just Geo, most of the Indo coal players have dropped of late.
Geo’s drop is compounded by their comparative yoy drop in earnings.
Revenue has actually increased, production cost has increased, but only slightly. The bulk of the decrease in earnings comes from the massive debt financing costs.
So the 2 causes are:
1) Drop in coal prices
2) Lower earnings compared to the corresponding period yoy

Let me explain why I’m not overly concerned. And this is where some DD comes into play.
Let me start with 2) first.
The financing costs in the form of the bonds are indeed high and eating away at the profits. And I do fault Tung for not deploying the funds faster, but at the same time, now is exactly the wrong time to be bailing out Cos of financing fees. Cos now that TBR offtake is finalized, the overburden removal is completed, increasing of barge and export facilities are upgraded... and TBR has exported its first 0.2mil tonnage, what remains is to ramp up production in subsequent quarters. Which doesn’t require much effort.
Managements next step is to look at deploying the funds, both from the bonds and from Macquarie, into acquisitions.
So forget about 2018, I think the lowered earnings would reverse in 2019.

Now, back to 1)
This is the major worry. China has scaled back their imports, resulting in a crash in coal prices.
Traders have stopped restocking, leaving miners and middlemen with too much coal stocks on their hands, and they’re trying to dump them on the market, hence undercutting each other.
Also, as prices come down, the higher calorific values are now value for money as thermal coal, displacing the 4200 low sulphuric coal for “coal mixing” to keep within the max sulphuric levels requirement.
Just to give a sense, Gar 4200 prices were as high as $70/t, dropped to an average of $41.50 in Q3, and Went as low as $29, $30 /tonne last week (just once!)
It has rebounded slightly and right now, is at $32/t.
I don’t agaration and put up these figures.
I do my homework while everyone else guesstimates the cause of the drop. (See attached)

Now, what gives me the guts to average up and continue adding if necessary?
Cos I think the $30/t is the floor for Gar 4200.
Why so?
Simply cos the production costs for most producers in Q3 is around that level!
Selling coal below that, is to sell it at a loss.
Geo’s production cost is $30.72/tonne in Q3, and that’s including the costs of starting a new mine (TBR).
It always costs more at the start Cos of the higher overburden removal, higher strip ratio, and all the misc costs of laying new access roads etc.
(See attached, I’ve even highlighted the paragraph for Geo for u)
GEAR’s production costs in Q3 is slightly higher than Geo’s, although admittedly, it’s lower than Geo’s in 1H.
Average Selling Price (ASP) - Production costs = Cash Profit

In Q3, Geo’s ASP is $43.48/t, production cost is $30.72/t, giving a profit of $12.76/t.

GEAR’s ASP is $40.80/t in Q3.
Adaro energy doesn’t release its exact ASP, but it’s a 9% increase in Q3 compared to Q2, which is lower than Geo’s increase.

In other words, at below $30/t, almost all the producers are going to sell coal at a loss.
Would they start dumping at a loss? I doubt it.
That’s why there’s a shipment last week at below cost, but it quickly rebounded back to $32 today.
China has suddenly increased import restrictions ahead of the seasonally high demand Q4 period and that has taken many miners by surprise. I don’t think this would last. Currently, coastal supplies can last 33days, so it’s on the high side. Once the stockpiles go down, China’s own production is insufficient and they’d have to start importing, and if there’s a brutal enough winter, they’d have to start importing with a vengeance.

Let’s look at Geos numbers now. In Q3, cash profit is $12.76/t.
I’m going to be more aggressive than all the analysts and assume coal prices remain low for a prolonged period of time into 2019.
Let’s assume a $35/t basis, giving Geo a cash profit of $5/t
(Rem production costs come down in 2019 due to synergies between SDJ and TBR)
Assuming a total production of 10mil tonnes
(Revises tonnage guidance given by management is 10-15mil for 2019)
That gives Geo a profit of $50mil.
With the increased number of shares from Macquarie stake, it’s still EPS of 3.6 US cents.
Taking away 20% as an additional MOS, with a forex conversion of 1.35, I’m left with 3.86 SG cents.
At the current price, that gives me a forward PE of 4.8x.
Also, the div of 2 cents gives a yield of about 10.6%.
And even if we cut away the interim div, it’s still 5.3%, which is pretty respectable.

Going forward, the key is the ICI4 prices in the coming months.
So let’s see how it goes.
Of course, coal prices can tank and undergo a multi year bear market like in 2011,2012, and my bet will fall flat on its face.
(But I don’t think so)

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$Geo Energy Res(RE4.SI)

Paging TA and demand zone experts... pls help me to understand this:

so, 1) says "false bullish breakout"
1. Why does "2) 0.215 range low held up once again keeping the long term uptrend intact"? Why does that keep it intact? There are trillions of charts that show this, and after a while, it drops below this support.
So how would u determine that it would "keep the long term uptrend intact"?
When it drops below 0.215, then you'd say that is has "broken the support" and then the uptrend is no longer intact? But if so, isn't it reactive? What useful application would that have since you're always behind the information curve?
In fact, even in this same chart, there's also a horizontal support line at ard $0.25..... but it went down also right?

2) More importantly......
why does "3) Bullish break above the 0.23 range high and 20,60MA with increasing volume suggests further upside next"?
Cos earlier, "1)" already says there are 2x "false bullish breakout"
Why is it this time it's not another "false" breakout? Why does it suggest "further upside next"?
I mean, logically, one can also say it suggest a "third time false bullish breakout" cos there were other instances?

I'm just trying to understand the logic behind this arcane science.
Is it logic, or is it emotional interpretation?
Is it predictive, or is it reactive?

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$Geo Energy Res(RE4.SI)

FY2018 production guidance of 11-12mil tonnes would mean a 50% increase from 2017's figures.
Q4 2017's ave selling price of $43.41 per tonne is the highest amongst all 4 quarters in 2017, and well, actually, the highest thus far since Q1 2016.
Taking FY17's EPS of 2.88 US cents, that'd be a projected EPS of 4.32 US cents for 2018, or approximately 5.6 SG cents.
Let's include a 30% discount for MOS and to account for the unearned earnings, that's leave us with 3.93 SG cents for FY18, making the forward PE based on the current $0.23, a very low 5.85x.

Immediate catalysts: upcoming offtake agreement for TBR site.
BUMA has already proceeded to start mining the site, actual production will commence in 2 weeks +, at the start of Q2.
Thus, it is not unreasonable to expect offtake agreement to be finalized within the next month.

Immediate risks: Jan 2018 production figures are still not good.
TTI's expectations for Q1 2018: Tonnage mined to be similar to Q1 2017's, but ASP to be 10% or so higher than that of Q1 2017.
(Q1 2017's ASP is $39.45)

Estimate is for 6 months, as the Q2 production figures (Which would include TBR's), would be disclosed in Q2 2018's results which should be sometime in Aug 2018.

Disclosure: at the time of writing this, I own 600,000 shares at an average price of $0.168

Always interesting to go back to see how my thoughts months ago have panned out.
Above, I wrote:
"TTI's expectations for Q1 2018: Tonnage mined to be similar to Q1 2017's, but ASP to be 10% or so higher than that of Q1 2017."

Results: Q1 2017 tonnage: 2,212,893 tonnes. Q1 2018 tonnage: 1,936,817
A miss of 276,076 tonnes
Quite close, but still a miss.

Q1 2017 ASP: $39.45 Q1 2018 ASP: $46.49
A rise of 17.8%, substantially higher than the 10% or so that I wrote above.

As of Q1 results, taking into account financing costs, I'm expecting full year EPS of 3.75 US cents (taking into account MOS already). Assuming a PE of 6x (substantially below its peers to account for poorer operating metrics), share price would be $0.30.

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