Linc Energy

[HitandRun]

Boon-san

A question for you. Is there any reason why you reckon that the Arckaringa Basin would be closer to Bakken or Eagle Ford Shale as opposed to Monterey Shale?

[psolhawk]

I do think the current low coal price and the risk of not being able to develop Abbot Point port are key risks that potential investors have to keep in mind. Although the present value of the “Carmichael Royalty” is seemingly going to be able to support the current share price as elegantly demonstrated by Boon, if the Adani group decides that it is too much hassle eventually (for example, they have to dump the sand at some costly far far away sites), they can still run away. The present value of the “Carmichael Royalty” will then return to zero.

=>
1.
Adani threatens to scrap Abbot point over dredging delays
Quote: "Sandeep Mehta, chief executive of Adani Australia Coal Terminal, has told Queensland’s Minister of Environment there is “a real risk the project will not proceed” if dredging does not occur between March 1 and June 30, according to legal documents filed with Brisbane’s Administrative Appeals Tribunal that have been obtained by Fairfax Media. “Adani will also suffer at least one year’s worth of losses associated with not having cargo moving through the export port,” Mr Mehta said in an affidavit."
http://www.smh.com.au/business/mining-an...z36MawAlYf

2.
Effect of concerted protests by pro-environmental groups on willingness of banks to finance the project
Quote: "I’m not saying Adani’s Abbot Point project is illegal–the local government has approved it–or that it won’t get the required financing from other process. But there’s no guarantee, as yet, that it will get done either. Anything is possible."
http://www.forbes.com/sites/meghabahree/...ed-waters/

[Boon]

Hi “HitandRun”

As Stan Holland (see post #8 ) puts it:

“I believe that the best way to think of the prospective unconventional reservoirs of the Arckaringa Basin is as a call option on a piece of the next Eagle Ford or the next Bakken and to not get overly excited about the 233 billion barrels of oil equivalent of unrisked mean prospective resources. It might not work. The nut has not yet been cracked in the Monterey shale in California or the Alberta Bakken in Montana. The Niobrara shale has not lived up to expectations either. Even if the Arckaringa Basin Shale does work it is unlikely to be a fast road to riches in my opinion.”

Hi “psolhawk”,

1) The “Carmichael project” has been approved by the State government – now pending Federal government approval which many think is a formality.
2) The Abbot Point Port expansion plan has obtained Federal government approval.
3) “Dumping of dredge material” is an issue which I believe could be “sorted out”- Also, I think there are alternatives to the Abbot Point Port option.
4) No doubt, there are risks but I would not ascribe a “zero“ value to the “Carmichael royalty” owned by Linc, even if Adani has decided to walk away from the project. Adani had paid a lot of money for the project and would likely be selling it to someone else who could manage the risks better. – this is a huge coal reserve which certainly has the advantage of “economy of scale” to operate even under current depressed coal price condition – in short, the “value” will always be there, waiting to be unlocked – also bear in mind that the “Carmichael royalty” is “tradable”

Final Thought:
Both Arckaringa Basin and Carmichael royalty have “values”, but I would rather ascribe zero value to Arckaringa at this stage than to the Carmichael Royalty.

(vested)

[Boon]

Case summary: Abbot Point dredging

10 June 2014

In essence, this case is a direct challenge by the Mackay Conservation Group (MCG) to the approval and conditions Minister Hunt placed on the controversial dredging at Abbot Point.

North Queensland Bulk Ports Corporation Limited (NQBP) applied for Minister Hunt’s approval under the Environment Protection and Biodiversity Protection Act 1999 (Cth) (EPBC Act) to undertake a program of dredging and dumping near Abbot Point to facilitate development of three new proposed port terminals: Terminal 0, Terminal 2 and Terminal 3.

These terminals are being developed to increase the capacity of the Port of Abbot Point to export coal from proposed coal mines in the Galilee Basin. The planned mines, rail infrastructure and coal ports are being developed by mining companies including Adani Enterprises, GVK Hancock, and Waratah Coal.

The project proposes to dredge 3,000,000 m3 of seabed near Abbot Point, destroying 180 hectares of seagrass and to dump the dredged material approximately 24 km offshore from Abbot Point in the Great Barrier Reef Marine Park.

Approval was given by the Minister on 10 December 2013. The approval decision is available here.
http://www.environment.gov.au/epbc/notic...cision.pdf

MCG, represented by EDO Qld lawyers, is challenging this decision in the Federal Court under the Administrative Decisions (Judicial Review) Act 1977 (Cth). It is claiming there were a number of alleged errors of law in Minister Hunt’s EPBC Act approval.

Of particular importance to the case are the requirements under s137 of the EPBC Act, that the Minister’s decision cannot be inconsistent with the World Heritage Convention (Convention) or the Australian World Heritage Management Principles (Principles). Among the many potential grounds of review identified in relation to the decision is that the Minister’s decision is unlawful because it is inconsistent with the Convention and the Principles, and it was premised on an erroneous construction of the requirements of s137.

In short, this case will require the Court, for the first time since the EPBC Act came into force in July 2000, to consider how the Convention and the Principles affect the Minister’s decision making powers in relation to Australia’s World Heritage properties.

The case is expected to be of interest to members of the World Heritage Committee because it is the EPBC Act which enshrines the requirements of the World Heritage Convention in law in Australia.

STATUS:

At the first directions hearing on Friday 2 May 2014, the Court ordered that NQBP be joined as a party to the proceedings. The case has been set down for a 5 day trial from 27 to 31 October 2014.

Note: NQBP required separate approvals for the dumping of dredge material under the Environment Protection (Sea Dumping) Act 1981 (Cth)) and for carrying out dumping activities in the GBR Marine Park (under the Great Barrier Reef Marine Park Act 1975 (Cth)). These were both granted on 31 January 2014.

The approval under the Sea Dumping Act is the subject of a current separate action in the Administrative Appeals Tribunal, being taken by North Queensland Conservation Council.

http://www.edo.org.au/edoqld/news/mcg-v-...ging-case/
________________________________________________________________________________________________________________
Comments：
1) The Mackay Conservation Group (MCG) is challenging the Federal Government’s approval decision.
2) The North Queensland Conservation Council (NQCC) is challenging the dumping permit approved by Great Barrier Reef Marine Park Authority (GBRMPA)
3) There are three new terminals being proposed at Abbot Point involving Adani (terminal 0), GVK Hancock (terminal 2) and Waratah Coal (terminal 3)
4) Five mega ports, including Abbot Point, along Queensland coast have been approved – which apparently would face similar “dredging material issues”
http://www.couriermail.com.au/news/queen...6945646084
5) This is not an “Adani” specific problem – it is an “economic development vs conservation” issue which the Federal & Queensland state governments have to resolve with the various interest groups – not an insurmountable problem, IMO.

(vested)

[propertyinvestor]

Huh? So the 20 trillion oil story is a hyped up thing? But why would Genting throw so much money into this company? Its comparable to how Keppel Corp throw money inside Kris Energy

[psolhawk]

Hi Boon, while you conclude that this is not an 'insurmountable' problem, I feel that if the cost of dumping the dredged sand (e.g. at land or further into the sea) outweighs the profits from the coal mining efforts, then Adani group can still call it off. Especially since coal prices are under pressure due to no issues with supplies globally.

[Boon]

Hi psolhawk，

Absolutely，the risks that Adani will walk away from the Abbot Point terminal expansion project AND the Carmichael project are always there – nothing is 100% full proof.

“Adani wants to send up to 60 million tonnes of coal annually by rail to Abbot Point and also provide port access to other miners in the region. Its current terminal at Abbot Point can only export a maximum of 50 million tonnes annually”

Current Terminal 1 (with 50Mtpa capacity) is owned by Adani – if it keeps the terminal for its own use, it could handle 50Mtpa, 10Mtpa short of its targeted production of 60Mtpa from Carmichael mine.

Adani has threatened to scrap Abbot Point expansion if the dredging issue is not resolved – but I am not sure if they have threatened to scrap the Carmichael mine as well.

http://townsvilleenterprise.com.au/Towns...082013.pdf

(vested)

[psolhawk]

Hi Boon, thanks for your views. I get your point. Unlikely they will totally abandon the coal mine. Interesting series of developments, let's see what happens.

[Boon]

Hi psolhawk，

Absolutely，the risks that Adani will walk away from the Abbot Point terminal expansion project AND the Carmichael project are always there – nothing is 100% full proof.

“Adani wants to send up to 60 million tonnes of coal annually by rail to Abbot Point and also provide port access to other miners in the region. Its current terminal at Abbot Point can only export a maximum of 50 million tonnes annually”

Current Terminal 1 (with 50Mtpa capacity) is owned by Adani – if it keeps the terminal for its own use, it could handle 50Mtpa, 10Mtpa short of its targeted production of 60Mtpa from Carmichael mine.

Adani has threatened to scrap Abbot Point expansion if the dredging issue is not resolved – but I am not sure if they have threatened to scrap the Carmichael mine as well.

http://townsvilleenterprise.com.au/Towns...082013.pdf

(vested)

Please also note that on page 16 of the presentation, it is stated that

"Dredging to be conducted by NQBP" - North Queensland Bulk Ports Corporation

If dredging is the responsibility of NQBP, I presume any additional costs for alternative "dumping site" would likely be borne by NQBP.

(vested)

[Boon]

7 July 2014

LINC ENERGY TO COMMENCE UNDERGROUND COAL GASIFICATION (UCG) OPERATION IN POLAND

• Total UCG gas production from Linc Energy’s Poland combined sites is estimated at about 800 billion cubic metres; being 10 billion cubic metres of pipeline quality gas per annum for 80 years
• Linc Energy gains initial approval to commence Underground Coal Gasification (UCG) operations in Poland upon the Company’s previously confirmed coal resource near Krakow.
• Stage one of Linc Energy’s Polish UCG operations to involve gas production trials and process verification.

Linc Energy Ltd (SGX:TI6) (OTCQX: LNCGY) is pleased to announce that it has gained initial approval from the Polish Ministry of the Environment to commence an Underground Coal Gasification (UCG) project in Poland.

The project will take place upon the Company’s nominated UCG site within its coal resource license area near Krakow in Poland. The site is ideally located and is well researched, with Linc Energy having already completed coal resource drilling, a seismic survey and a detailed evaluation of the coals geological conditions indicating that this coal is very suitable for UCG operations.

The Company’s internal evaluation indicates that its Polish coal resources could produce approximately 800 billion cubic metres of pipeline gas across the life of the combined UCG projects at the rate of 10 billion cubic metres of Gas per annum for the next 80 years.
During the first stage of the Polish UCG project Linc Energy, working closely with Polish regulators, will undertake gas production trials and verification of its proprietary UCG process. The aim of this stage will be to confirm that UCG operations in Poland are operated as a safe and environmentally acceptable method of industrial scale gas extraction that can be adopted as a commercial energy solution in the near future.

Linc Energy will be working with a number of local Polish companies and research organisations during the construction and operation phases of Linc Energy's first UCG facility in Poland. Linc Energy is still seeking finalisation of some necessary regulatory approvals prior to construction commencing.

As part of the new Polish UCG demonstration operation, Linc Energy intends to move some of its existing UCG equipment and Gas Lab from Chinchilla in Australia to its site in Poland, as well as re-using a significant amount of UCG production equipment, with key items anticipated to commence arriving in Poland by the end of the 4th quarter of 2014. As such, Linc Energy expects stage one of its Polish UCG facility will be very cost effective and fast to construct.

Peter Bond, Chief Executive Officer and Managing Director of Linc Energy said; “It is pleasing that all our hard work and investment is starting to move forward to an operating UCG facility in Poland. As we commence these initial trials of our well proven and patented UCG process, I believe that UCG will start to change the current energy landscape in Europe through its ability to create gas self-sufficiency in those markets that are currently dependent on imported gas supplies.

After all, once Linc Energy takes its Polish UCG operations to a commercial scale, Linc Energy alone could replace 10 billion cubic metres of gas per annum for in excess of 80 years."

http://infopub.sgx.com/FileOpen/2014.07....eID=304373

(vested)