Short term investments, real opportunities
Australian Pacific Coal was listed in 1999 on the ASX, but did not start out in the mineral and natural resource exploration space, explains Paul Byrne, Managing Director of APC. “The company was formed in 1999 as a technology incubator back then, that cycle in the market was a bit close to be in, with the tech boom and everything else. We have had a couple of lives, and more recently, since myself and a few colleagues have joined we have begun to focus on industrial minerals, and then moved into the coal space only a couple of years ago,” he says. The current industry that APC now focus on is the direct result of projects that were generated by Byrne, another director. “We put together a number of projects in order to give the company a new life, and that was in 2009;so this means that we have really only been exploring in the coal space since early 2010 – which means that we are very young in the terms of explorers in the coal space. But we have secured some very strategic projects through the Bowen Basin, but more importantly we have secured other projects, which we have joint-ventured out with other companies, but our focus has remained the Bowen Basin.” These other projects lie in the Galilee, Surat and Clarence- Moreton basins. Their focus on the Bowen is due to the fact that much of what Byrne describes as the premium type coal is produced there.
A good place to be
Coal seems like one of the best things to be exploring for at this time, with Australia dependence on coal as an energy source, and with the industry of China being dependant on the mineral. During the GFC China has made several moves to attempt to gain control of, or access to, Australian iron and coal. In February China and Australia penned a deal that would see China Power International Development (CPI) 30million tonnes of coal a year for 20 years from Queensland. This deal has been largely considered the largest export deal in the history of Australia. For APC, this is good news. “We have a lot of paper on the market right now, 530 million shares, so there is a lot of flow in the stock with a lot of turnover. There are lots of trades made daily in the company. The tenements that we are currently focused on are not where most people are looking – those in the more remote areas – our company’s philosophy has been to look at areas where there is a fair amount of infrastructure already in place,” says Byrne.
A guiding idea
“This means we are looking at places that already have wash plants and rail sights. We also are looking at locations that have access to roads, power, a population to seed the future workforce – and all those sorts of things. We stayedaway from these remote areas,” he says. This means that investors may be looking at much faster returns than those operating in the fringes. APC’s management team has been focused on securing strategic tenements by identifying those located near already operating mines, or in areas in which the infrastructure has already been built up, so that they may take advantage of more short term development projects. “We have also looked at smaller type operations where we can feed our coal into an existing market place, without having to worry about rail or roads,” he says. Byrne says that APC is very aware of the projected short fall of coal in the near future, and he says that they have already set up their projects so that they can feed directly into those markets that will be suffering from these shortfalls. “This is a big plus for us, with other companies required to build rail lines, roads, and ports, this means that they have to put up big money upfront,” he says. He says that the time table for developing new ports will hinder other developments, and Australian Pacific Coal will be able to fast track their projects, which represents to investors – not immediate returns – but faster ones.
Being a good neighbour
Since they consider themselves a small to medium sized explorer and development company, Australian Pacific Coal is also looking at ways of setting up shop in a manner that they can literally sell their product “over the fence”. This will outsource the washing, processing and distribution of the finished product and represent positive cash flow back into the company allowing them to further expand their exploration abilities. This move represents a form of insulation from risk for their investors, and also gives them a free hand to explore their strategic positioning in the market. “It absolutely protects our investors from some of the risk, but it also must be noted that we are dealing with premium quality coal, and we are looking at ways in which we can access this very cheaply,” Byrne says. With the numerous operational mines surrounding their tenements, they are already well set up to take advantage of this. “With the discussions we have had with them, and the coal industry in general, we are fairly confident that we can produce products that will be sold readily into the market place.”
Byrne says that they have maintained a focus on metallurgical coals, as well as high quality thermal coals. These two focuses have set them well up for the present and future market. “Our main focus is still on developing smaller mines, and more than one. We have four projects that we will be drilling over the coming months; we have just completed drilling on one of our open cut areas on our Karrutha, where we already have a JORC resource for that tenement. On the contact zone for the Jellinbah mine we have some very interesting results that we have just put out and we are waiting for some responses back on that. So we? continue to look at smaller mines that might be mining up to half a million plus a year, but then feeding that into the market over the fence, and we would like to say that we will have more than one of those that can potential feed into the existing market.” APC also currently owns two substantial industrial minerals projects in central western Queensland. These projects were part of their previous exploration bid, and the company is looking to divest itself of the properties in order to reinfuse cash into their operations.? Byrne says that the soonest he thinks that they will be able to offer a product on the market that could be developed would be by January next year. This projection more than beats most explorers due to its short term return possibility. This quick turnaround can be attributed to APC’s dedication to developing sites that have large supporting infrastructure already in place, it is one of the things that Byrne says sets them apart now, and will continue to in the future.
