Tod:
I'll address this to you since you seem to be the chief cheerleader.
Since comparable company analysis is one of the best methods of DD, I fully expect you to place this in the front of the thread because, of course, all new investors need facts, all the facts, in order to make an informed purchase decision. You are the keeper of the DD, aren't you?
Lets use Zeigler Coal Holding Company (ZEI)
edgar-online.com 0
ITEM 1. BUSINESS
Zeigler Coal Holding Company ("Zeigler" or the "Company"), through its subsidiaries, is one of the largest coal producers in the United States. The Company currently operates, through its subsidiaries, seven active underground and surface coal mining complexes located in five states, two east coast transloading terminals, a power marketing business, and other energy-related
businesses.
Coal operations accounted for 75% of the Company's total revenues and 125% of operating earnings in 1997. The Company produces primarily steam coal, with sales to electric utilities accounting for approximately 90% of its 1997 revenues from coal sales. In 1997, approximately 89% of the Company's revenues from coal sales resulted from long-term supply contracts, most of which call for prices that exceed the price at which such coal could be sold in the spot market. At December 31, 1997, the Company owned or held through leases approximately 1.2 billion tons of economically recoverable coal reserves, including .9 billion tons of low-sulfur and compliance coal.
POINT 1:
ZEI's 1.2 billion tons of economically recoverable coal reserves are show on its balance sheet as "land and mineral rights: total value: 673 million.
Contrast that with:
Mountain Energy owns and controls the mineral rights in West Virginia that contain approximately 1.98 billion cubic feet of gas and 10,000,000 tons of coal, as well as other properties that all combined, have an estimated fair market value in excess of $200,000,000 with approximately 70,000,000 shares outstanding after the acquisition. This translates to approximately $2.85 per share.
ZEI has proven reserves and mineral rights for 1.2 billion tons of economically recoverable coal and a booked balance sheet value for mineral rights and proven reserves of $673 million. MTEI has 10 million tons of unproven economically recoverable coal and the spin is that they will book this at $200 million? We seem to have a difference of opinion to the tune of a factor of 120. Let me say that again: a factor of 120.
It seems to me that ZEI's holdings are tremendously undervalued by itself, its auditors and the everyone who trades on its exchange or MTEI's are overvalued.
Perhaps ICVI should have reverse merged into ZEI. Certainly would have been a lot more lucrative for the stockholders.
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