Coal Asia reevaluates coal resources

CEBU, Philippines - In compliance with the Philippine Stock Exchange (PSE) requirements related to the Initial Public Offering (IPO), Coal Asia has decided to engage an accredited third party company to re-evaluate and revalue the coal resources of its subsidiary Titan Mining and Energy Company (TMEC).

The decision followed after Coal Asia Holdings, Inc. (PSE: COA) is still being seen as an undervalued company based on current valuation and market capitalization, after trading at 30- to 50 percent based on the current valuation and market capitalization.

A previous valuation was done last May 2012 by Multinational Investment Bancorporation (MIB) which, based on data from March 2012, has valued the coal reserves at a combined amount of 123 million metric tons (MMT) at P12.5 billion. But recent data as of June and July of this year has initially claimed that the previous valuation based on the existing coal operating contracts (COC’s) in Davao Oriental and in Zamboanga-Sibugay may actually still be undervalued because of current coal prices and estimated yield from the aforementioned COC’s.

In the same way, market capitalization is at P4.24 billion as of the last trading day. That means the company stock price still needs to jump by at least 300% for it to meet MIB’s previous valuation.

In a statement, Coal Asia believes that in order to be true to the investing public, this re-revaluation has to be made.

“Based on the results of the revaluation, the corporation shall conduct a study on options to enhance stockholders benefits. The enhancement in the corporation’s assets will allow it to have retained earnings, and will result to a possible buy-back program depending on a surplus situation,” Coal Asia said in a filing.

Another factor which solidifies the company’s valuation is its plans to be involved in the power production especially for the Mindanao region. The projected volume of the operations of Coal Asia’s subsidiary, Titan Mining and Energy, is enough to supply the expected explosion in demand by large scale energy producers racing to establish their coal-fired energy generating plants in the region as they prepare to bridge the gap of supply of the current power needs of the region. 

As one of the few major coal mining players in the area, Coal Asia has established a key position by initiating discussions with the DOE and other power companies that plan to expand operations in the southern part of the country for long-term supply agreements. Positive talks with large power producers have been initiated and talks of a mine-mouth power plant set-up have been mentioned.

To add to its commitment to the energy sector, Coal Asia’s affiliate, Colossal Petroleum Corp., signed a memorandum of agreement to buy into VenturOil which owns Service Contract (SC) No.6 covering the offshore oil and gas exploration rights to Northwest Palawan encompassing the Cadlao and Bonita oil fields. —(FREEMAN)