Western Canadian Coal Corp Message Board

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Gold/Mining/Energy : Western Canadian Coal Corp

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From: Brian	10/17/2008 1:49:42 AM
	of 5

This article is a bit dated but may give some holders of Western Canadian Coal some light at the end of the tunnel network.nationalpost.com Plenty of value in Western Canadian Coal Posted: September 11, 2008, 11:30 AM by Peter Koven Mining Like all other small mining companies, shares of Western Canadian Coal Corp. have been clobbered in the last couple of months, falling from a high of $10.99 in June to just over $4.00. Paradigm Capital analysts Jacob Willoughby and Dave Davidson think it is going right back to where it was. They initiated coverage on the stock with a "buy" rating and a target of $11.00 a share. They point out the obvious: metallurgical coal prices are at record levels and are expected to stay high for some time. Western Canadian, meanwhile, is slated to produce 3.5 million tonnes of it this year, and has the resources to ramp up to 7 million in 2012. With coal prices locked in for the fiscal year, the company's profitability is also quite reliable. They wrote that the Western Canadian is generating $1-million in cash flow a day, and adjusted net margin should continue to increase in the coming quarters (it was 28% in the first quarter of fiscal 2009). Also, Western Canadian has excess port and rail capacity that allows it to boost output. Those are major constraints for other coal companies in Canada and Australia. The target of $11.00 a share is based on a multiple of just one times net asset value. The analysts noted that their NAV calculation makes some "fairly conservative assumptions" on Western Canadian's future capital requirements. The long-term metallurgical coal price assumption is US$160 a tonne, way below current levels.

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