Rich lister targets CQ mine
DESPITE production issues, super wealthy entrepreneur sees future in coal.
Wednesday 22 February 2017
Condamine businessman and farmer Lyn Brazil has invested nearly $A10 million into Stanmore Coal this week.
Mr Brazil was ranked the 55th richest person in Queensland by the Courier Mail in 2014 and has extensive interests in agriculture and property. Perhaps his most well-known investment was in online room booking business Wotif, which netted him around $30 million when it recently sold for about $700 million.
Mr Brazil bought around 16 million shares in Stanmore Coal which has given him control of just under 6.5% of voting stock, making him a significant, but minority shareholder in one of Central Queensland’s newest coal companies.
Mr Brazil’s investment success in the past seems to have got others thinking, with share prices in Stanmore increasing around 10% since he made the purchase, representing a paper profit of $1 million already.
However, his investment is also a sign that he believes in coal, and that management can overcome the production issues they’ve had in the last six months at their flagship Isaac Plains mine south of Moranbah.
Stanmore failed to meet production targets at Isaac Plains in the last half of 2016, meaning they were unable to sell roughly half the coal produced in the December quarter at peak prices because they were still fulfilling contracts set at lower prices earlier in the year.
The company even went into a trading halt in December when they sought to raise $15 million to fund increased development work associated with a revised mining plan which will allow them to access lower cost coal.
However, Stanmore believes the extra investment in development work funded by the capital raising late last year will bear fruit when strip ratios for target coals will temporarily fall by around a third in 2018, which they hope will allow them better profits in the short term.
Meanwhile, Stanmore says it’s pushing ahead with the development of the Isaac Plains East tenements (formerly known as Wotonga) which they purchased in 2015 from Peabody for around $7 million.
The IPE deposit is more or less adjacent to the existing mining operations at Isaac Plains, so in theory, they should be able to exploit the resource using their existing mining fleet and infrastructure.
However, they still have to negotiate access with affected landholders to fulfil that objective - which history has shown can be an unknowable delay.