July 01, 2011 12:00AM
By Tim Boreham From The Australian
THINK of a Bathurst winner and Peter Brock or Jim Richards come to mind, but investors in this New Zealand coking coal developer saw the chequered flag in 2010-11.
Bathurst Resources (BTU) $1.025 and others
Bathurst shares last night closed up 585 per cent for the year, making it easily the best performer in the ASX 200 index.
Bathurst's fortunes contrast with the Pike River mine 100km down the road, which fell into administration after November's disaster that killed 29 workers.
Tellingly, eight of the 10 top performers were mining stocks, with another, contractor NRW Holdings (NWH, up 184 per cent), riding the coal dragon.
Seeing you asked, the others were US shale play Aurora Oil & Gas (AUT, 354 per cent); rare-earths developer Lynas (LYC, 263 per cent), mineral sands miner Iluka Resources (ILU, 260 per cent), Indonesia copper/gold hopeful Intrepid Mines (IAU, 181 per cent), coal-to-gas specialist Linc Energy (LNC, 197 per cent), WA gold play Regis Resources (RRL, 177 per cent) and African iron ore developer Sundance Resources (SDL, 161 per cent).
The odd man out, biotech Mesoblast (MSB), rounded out the top 10 with a 367 per cent gain.
Most are at a crucial stage of development that will justify (or otherwise) their heady valuations. Sundance has entered commercial partnering discussions re its Mbalam project in Cameroon. Expect good news.
Lynas shares are on trading halt until Monday pending the results of an independent review of its proposed Malaysian processing plant. Don't expect good news. Linc, which has gone on a US asset buying spree, is a longer-term story. Intrepid has had a spot of bother with illegal miners on the periphery of its Tujuh Bukit project, but otherwise it's all wow factor as it shapes up as a billion tonne-plus deposit.
Coming back to Bathurst, the company is engaged in an environmental consent process. Hearings are due to resume on July 6.
Bathurst plans to be in production by the end of the year. The initial production target is 650,000 tonnes, rising to 4mt by 2015.
Bathurst's high-quality output is likely to command a 15 per cent premium over the prevailing benchmark hard coking coal price of $US330 a tonne.
Bathurst also has money in the bank, port and rail facilities and a ready workforce.
Bathurst's $680 million market cap looks stretched on a dollars per resource tonne basis, but on a projected earnings basis the sums are more interesting.
On rough (and conservative) numbers, Bathurst should generate $100m of EBIT in 2011-12, representing an enterprise value to EBITDA valuation of seven times. If the 2015 production ramp-up is reached, this ratio falls to 2.3 times. Recent coal transactions such as Rio's takeover of Riversdale Mining have been on a multiple of 8-10 times. That's enough evidence to warrant a hold call, in our view.
As for the others, we recently rang the bell on Aurora Oil & Gas and Iluka on valuation grounds.
This month we endorsed Linc as a spec buy because its $1.5 billion market cap is accounted for by its Australian tenements alone.
Solco (SOO) 10c
CHANGES to solar subsidies and revelations of shoddy wiring in NSW home installations have left the solar industry in disarray.
In this context, the Brisbane-based panel wholesaler's guidance of record profit and revenues is as welcome as a ray of sunshine on a winter's day.
Solco expects to generate $3.6m for the year on a 50 per cent rise in revenue to $52m.
Solco executive chairman Dave Richardson says the capital cost of a panel has halved over the past five years, while quality has improved.
Given Solco imports its panels (mainly from China), the strong dollar has also helped.
Solar, he says, is now "a very well accepted technology". But for hermits who haven't noticed those "buy before June 30" solar ads, changes are afoot: from today, the federal government's multiplier scheme -- by which households receive five renewable energy certificates for each megawatt hour of electricity produced -- is wound back to three.
Richardson expects demand will ease for a couple of months, but then pick up again.
The lower cost of production coupled with soaring power bills means we're reaching "grid parity", the point at which solar power (without subsidies) is no dearer than conventional electricity.
Solco, which is supported by a base of 1400 retail holders, trades on a lowly multiple of four times and last year paid a 0.25c dividend. (By TheAustralian)
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