BRISBANE, Australia -- Linc Energy responded to an Australian Stock Exchange (ASX) "please explain" after its shares dropped from $1.15 to $0.92 on June 24 in heavy trading, saying it was unaware of any "unannounced " information that could explain the trading and price drop.
The Gregory Crinum coking coal mine, owned by the BHP Billiton-Mitsubishi alliance (BMA), is thought to be worth in the order of $400M.
Linc CEO Peter Bond told the ASX it planned to restructure its coal division to focus on its oil and gas production assets and could work with partners – a suggestion one analyst believes seemed quite plausible in relation to the possible Gregory deal.
"Linc is still cashed up from the Galilee Basin sale," the analyst told Australian Coal Report.
"Bond wants to remain a crusader for coal to liquid but the market would prefer that he move to what the market's interested in, so he's been looking at all sorts of structures for a long period.
"I've heard they're looking at all sorts of options for their coal assets, whether they stick on their own or acquire assets and mine them and look for synergies there."
Linc's statement to the ASX said "it has not made any binding offer or reached any concluded agreement with any entity in relation to the matters subject to current media speculation".
Linc did not deny the possibility of a deal with BMA, and the language used suggests the two parties could well be in negotiations.
Reuters on June 24 reported a source "familiar with the deal" saying discussions were at a "very early" stage.
Linc said: "To facilitate the divestment or demerger of its Coal Division, Linc Energy is continuing to evaluate a number of options, including the possibility of working with joint venture partners who have synergies with Linc Energy's existing coal portfolio."
Bond said: "Linc Energy is focused on developing its core business of oil production and the commercialisation of UCG on a global scale. As such, Linc Energy is committed to divesting its Coal Division, and is actively pursuing a course to achieve this."
A spokeswoman for BMA declined to comment, but earlier this year the company said no decision had been made and any move to sell Gregory Crinum was unlikely until the second half of this year. It hasn't put a value on the mine. In October last year the Gregory open-cut mine was closed but Crinum, an underground mine, continued to operate.
Brisbane-based Linc has focused on developing UCG but also has coal assets including the Teresa deposit in Queensland.
In August 2010, Linc sold thermal coal deposits in Australia's Galilee Basin to India's Adani Enterprises for A$500M plus royalties of $2/t for 20 years – potentially making the deal worth $3B. It was the largest Indian acquisition of an Australian asset at the time.
The coal industry analyst told ACR it was believed Linc was attempting to partner with a multi-national mining group which did not have Australian assets.
"Everyone's trying to cuddle up to someone with money and partner into their assets," he said.
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