₪ David Pescod's Late Edition May 25, 2006
PACIFIC ASIA CHINA ENERGY (V-PCE) $1.39 -0.03
We’ve been calling the disease “printing press-itis”
and it’s been rampant over the last few years. It seems
that so many of the junior mining exploration companies
have gone out of their way to print so much paper
that investors/speculators have little leverage left if the
company ever does get to amount to a hill of beans!
Pacific Asia China Energy has done all sorts of financings
at $0.12, $0.25 and $0.50 along with warrants and
so forth so that they now have a 100 million shares
outstanding, but yet this is a company promising lots
of excitement for it’s potential coal bed methane play in
China despite the fact that they just barely started a
drilling program to see if they do really have anything.
That’s right…..97 million shares outstanding, no
revenue because they haven’t completed their first well
and they still don’t know whether it’s a viable operation
and yet speculators give it almost of $150 million market
cap. Obviously, those speculators have hope.
That is of course our side of the story and that’s the
way we will look until they actually do some drilling
and prove if they’ve got something. On the other hand,
if you want the aggressive story you take a look at
Lawrence Roulston’s recent feature on Pacific Asia China
Energy and you can see that despite the squandering of
the company’s potential leverage and the fact that it is
in China, where there are no mining companies that we
know of yet that have developed and have been able to
return capital to foreign investors, and hence establish
some sort of financial track record—there appears to
be hope. At least to some.
Led by Devinder Randhawa, the founder and chairman
of Strathmore Uranium (STM), Roulston writes,
“he has assembled an impressive management and
technical team, which includes a great deal of expertise
with coal bed methane”. “It is widely known that China is
the largest coal producing nation, each year mining a billion
tons of coal”. I guess we all realize that with its huge
population, it will need ever more energy.
“China’s vast coal resources contain abundant amounts
of methane which until recently was not being recovered”. In
his article, Roulston mentions that “to exploit the enormous
potential of its coal bed methane, China has allowed several
Western companies to contribute capital and expertise in
return for a share of that energy resource.”
Hence, Pacific Asia China’s new exploration plays.
PACE’s Guizhou project encompasses 970 square kilometers
and PACE can earn a 60% interest in the project by funding
$8 million of work. Drilling has commenced a while ago and
is in a well established industrial region, so any market for
the gas would be definitely there and available.
Somehow, Sproule and Associates have suggested that
working from Chinese coal resource estimates as a basis for
CBM calculations that the volume of CBM in place is 5.2 Tcf.
They suggest the low case shows 0.5 Tcf while the high case
figures 11.2 Tcf, but we will emphasize that until they actually
do some drilling and testing and the like, these dreams of
“T’s” are strictly that. Although we note the association between
coal and coal bed methane.
PACE also has rights under a separate agreement to earn
a 70% interest in a 305 square kilometer project in Hubei
province of south-central China where $4 million in exploration
will gather them a 70% interest.
Interestingly, “PACE has established an alliance with an
Australian drilling company” Roulston points out, that has
become a leader in CBM technology, and they will use
Mitchell’s proprietary drilling Dymaxion System in China.
Roulston writes “Dymaxion is a unique and highly effective
surface to in-seam drilling technique which the company has
deployed since early 2000 and over 200 wells have been
drilled on CBM projects.”
To us, we figure this is one play we are going to have to
watch and watch closely because while there has been an
interesting play squandered, the prize is still potentially so
large, that it cannot be ignored.
There are several plays around the world that mention
“T” as in Trillion Cubic feet as being the targets, and people
are starting to forget it seems, just how significant a trillion
cubic feet is. As an example, a trillion cubic feet at the current
level of $6.00 an mcf works out to $6 billion.
For a copy of Roulston’s report, e-mail Sandra at sandra_
wicks@canaccord.com. |
