Indonesia
Here is what Collins said about Indonesia in his letter yesterday:
"The Indonesia project we announced this past January for a 1.5 million ton per year facility on Kalimantan Island continues to move forward. Our equity partner Sumitomo and the major Indonesian coal concern with whom we are working have received recent positive Phase II coal testing results, and we anticipate finalizing the scope of the joint Phase III study in the near future, which will include detailed engineering, financial, and marketing studies."
To me it sounds like the end customer for this Indonesian lignite/K-fuel has just gotten around to testing it in their own boiler, beyond the basic transport and lab tests that Collins referred to earlier this year. Those kinds of delays have happened before, given that you can't just drive up to a customer's power plant with a train load of lignite, and say "test it". There is also a considerable transport delay involved with getting the lignite sent to Gillette from Indonesia, processed, and then sent to the end customer (somewhere in Asia.) The customer could also have requested a larger quantity of K-fuel for more test burns in different plants. There can be no doubt that Sumitomo wants offtake agreements as deep as possible before they fork over somewhere in the area of $150M to build a new plant. Getting quality offtake agreements is a tough job, given that those K-fuel plants are expected to have a 40 year life span.
I have no doubt that things are still moving forward with the Indonesia deal, as Collins states, though obviously at a snail's pace. On the other hand there is no immediate urgency for Collins to make major concessions, as the Buckeye operation seems to have the ability to keep Evergreen afloat for an indefinite period of time, or at the very least until those big deals get signed.
This whole thing has been very exciting lately, hasn't it? Those Evergreen guys got so close to a big deal that the actually delayed the 10Q so that they could release both the 10Q and PR at the same time. But the deal fell a little behind schedule and they had no choice but to release the 10Q yesterday due to the SEC deadline..... The bottom line is that first big deal could still be announced at any time. Exciting, ain't it? Maybe that's why the stock is up a little this morning - cautious optimism. I sure wouldn't want to be on the short side of this stock right now. Evergreen has been overly optimistic in the past, but this specific management has never before exhibited this level of confidence in a pending deal. |
