Member Info for Unglove

WTN is cash rich and may continue to provide profits for Q1 and Q2 in 2009 due to carryover on last year's prices. It superficially looks grossly undervalued but beware as production costs are higher than most of the large coking coal producers and could be one of the first to become unprofitable on next year's coal contracts. Wolverine may have to be mothballed. The CBM merger probably adds little to WTN value as CBM is in debt. However, sp unlikely to go much lower considering it's cash position IMHO. Suggest wait until coking coal prices start to recover.

One of the big funds dropped a few million CBM shares around the time of the WTN 3Q news. This held back CBM sp (WTN peaked at 38.5 - so CBM should be 75% of this and a small discount). Next we had DOW doing badly which seems to have affected all the coal mining shares significantly including WTN - probably also linked to the oil price dropping further (although oil recovered a bit today). Basically the big fund drop scuppered most of us (including me) that were expected a 20% or more increase on WTN results. WTN valued at less than half it's profits for this financial year!

CBM is being bought for 0.75 WTN share per 1 CBM share. WTN currently around 34p equivalent on TSX and as such when the deal is completed you could expect around 25p. However, the deal is not yet confirmed (but IMO is nearly 100% definite) and it will be be some months (perhaps 2-3 months) before the 'merger' occurs. WTN Q3 results out this week and should continue to show a strong profit due to continued contract selling at US$250-300/t. However, the most crucial aspect for WTN is if they can show a decrease in productivity costs this year to enable them to be profitable with the much lower contract prices for 2009. If they can get productivity costs down to <C$100/t then they could do well.

Should go above 30p very quickly tomorrow.

CBM flatters to deceive again. I guess there is considerable disbelief from the market that there will be a share for share buyout as the sp has dropped by 25% on minimal volume. There must be a fair chance that this will go ahead in the next 2 months (it is in the interests of both WTN and CBM) and I still suspect that 30p will be a minimum and may well be 50p. The buyout could be 1 or 1.5 WTN shares for each CBM share - I still favour 1.5 WTN shares (that is if WTN is the buyer).

General expectation is that WTN will be offering it's shares for CBM shares. Some suspicion that CBM sp may have been manipulated down to 14p to lower shareholder expectations - it is plausible as value based on WTN shares, EBG shares & 100% of CLN should give a market cap of easily >£30m even with 60% discount on shares in WTN & EBG. 30p a minimum and could be much more.

If you gave 40% discount on WTN & EBG shares that it owns (at current sp for each) and then add value of the XTR shares and likely value of CLN (if it was still independent than sp of close to 20p would be likely) you might have an expectation of an sp of over 40p. But then coal shares in most companies have taken a severe beating and continue to be battered. CBM sp is out of kilter with WTN and EBG and it may be that some of the big institutions have been off-loading CBM in a big way over the last couple of week as it is difficult to rationalise an sp <30p in comparison to the companies it part owns & with full ownership of CLN and its XTR shares. Could be an early recovery in sp but depends on when the big sellers have finished and it could easily take some time before CBM recovers. 340p to 18p in a matter of months is extraordinary.

The sp we have hit today values CBM as worthless and that WTN will be unprofitable after March 2009...

My expectation for today was about 20% upside - so not far off. Not sure what deal you are asking about with CLN - it is 100% owned by CBM. What remains uncertain is contracts for next year although it has one very profitable deal agreed for some of its coking coal. WTN spike at the end of trading last night remains an enigma - will be watching it's progress very closely on the TSX.

WTN up nearly 40% on TSX tonight - rapid rise at close. It is under offer so worth watching closely. CBM own 89m shares in WTN.

My previous post is some background info and is taken from first qtr results from WTN. You will see that Willow Creek is a new addition to WTN and produces a small fraction of its production. Most coal producers are cutting production in lie with decreased demand. WTN are cutting costs for 2009 and sp has increased by 20% today on TSX - so the announcement is not seen as negative!

The Company’s Wolverine hard coking coal and Burnt River ULV-PCI coals have been sold to major steel mills throughout Asia, Europe and South America. Long term supply agreements have been concluded with top tier steel mills for 100% of the 2008 planned output of the Brule mine and the Wolverine mine. With resources now fully deployed for coal year 2008 (the Company’s fiscal 2009), the Company anticipates approximately 1.9 million tonnes of production from the Perry Creek Mine, of which approximately 1.7 million tonnes will be marketed as Wolverine hard coking coal while the balance will be marketed as Wolverine Mid-Vol PCI. The Company anticipates 1.3 million tonnes of Burnt River ULV-PCI production from the Brule mine. In addition, recommencement of mining at the Willow Creek metallurgical coal mine is scheduled for the start of the fourth calendar quarter of 2008, building up to a rate of approximately 60,000 tonnes per month of ULV-PCI for a total of 285,000 tonnes in fiscal 2009. The majority of this forecast ULV-PCI production has been contracted to major international steel mills. All of the Company’s expected hard coking coal production and ultra low-vol PCI production for fiscal year 2009 is already under contract and will be sold at the prices described above.

P/E is a bit exceptional but a sign of the times I guess. CBM own 89m shares in WTN, all of CLN, 50% of EBG, all of AGD, 20% NEMI as well as having some XTR shares to hand out. WTN is for sale but no deal as yet.

Probably did bottom at 27.5p. Current valuation is based on an assumption that WTN will be unprofitable for next year or so. It does have high production costs but I suspect it can reduce these and manage some profit next year. Likely to make >C$250m profit for this financial year so P/E is very low!

25p did seem to be likely but if Dow starts to recover then may not drop to that level. At one point I had wondered if it would go under 25p! Lowest level this week was 28.5p and WTN still dropping - but it must also be near bottom.

Ur in the cinemas from tomoz - guess CBM has left you shaken but not stirred. Fair chance CBM could reach 70s next week.

I agree the sp is extraordinarily underpriced - but then as you know all the mining shares have been clobbered and CBM is not the only one that in the space of 3-4 months dropped by 90%! It was difficult to predict bottom - at worst I thought 45p but it went to around 32p probably due to distressed selling as well as general market panic. CBM should be more than £1 imho but depends on markets stabilising.

Should be back just before last week in November. I guess most had written these off. They now have sufficient financing but sp will be much lower - would not be surprised if it is around 20p (considering drop in oil price etc etc)

Looking good atmo - hopefully you have some blue on your screen.

Three reasons to hold or buy over the next few weeks: 1. WTN quarterly report out in mid November - expect around C$100m profit (and subsequent quarters may be C$150m each) 2. CBM may report soon over the CLN contracts - which are apparently good from posts on ADVFN (and this is commensurate with current spot prices in US) 3. CBM stated they would complete strategic review by end of calendar year - so WTN may be sold. The downside (as ever this year) is the effects of the credit crunch on the world economy - is the stock market in for another pasting in the near future or not? Next few days may give some indication - watch the DoW carefully.