Optimum surges on deal prospects

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[miningmx.com] — SHARES in Optimum Coal Holdings gained 2% on Wednesday taking gains for last five trading days some 14%.

An analyst said the company had “massively underperformed’, this year but that the coal price had held up quite well which could support the share.

Optimum Coal’s share price is down nearly 9% since January. Coal export prices ex-Richards Bay are trading at $100 to $120 per tonne.

The share price improvement also comes off the back of a cautionary announcement earlier today in which Optimum said “… there are circumstances in relation to the company which could have a material effect on the price of the company`s shares”.

Mike Teke, CEO of Optimum Coal declined to comment on the company’s cautionary announcement. “We are reporting figures next week. Maybe you should wait until then,’ he said. “We always try to improve our business,” he said.

Miningmx reported in July that Optimum Coal was considering raising between R800m and R1bn, and was in negotiations with BHP Billiton and Anglo American to buy mineral rights.

However, the company was not interested in bidding for the 2Mtpa Kleinkopje, an asset that Anglo American was hoping to sell.

“To raise that amount of money, they must be some mineral rights,’ an analyst said today.

Optimum Coal was also regjigging its project portfolio, pushing delivery back on certain plans. Planned production from the Schoonoord project, with saleable output of 1.2Mtpa is currently waiting on regulatory approvals such as a water licence.

But starting dates for Overvaal, Vlakfontein and the Koornfontein 4-seam project, like Schoonoord planned for mid-2012, have been postponed.

Development focus will rather fall on Koornfontein which in May added tonnes in the form of the TNC mine.

It’s felt in Optimum that the scope of that project has been completely under-estimated by the market and will have huge value.

If Optimum Coal raises debt as planned, group gearing will increase to between 15% to 18% from the current level of 7.5% to 9%, a level considered by Stephen Meintjes, an analyst from Imara SP Reid, to be appropriate.

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