BBY Limited
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Linc Energy Limited
Coking Coal Deposit to Help Fund LNC
LNC A$2.12
BUY
12 May 2008 26 May 2000 Jeremy Tobias
(02) 9226 0086
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Linc Energy Limited (LNC) has announced that it will commence exploration drilling on its Emerald Coal Tenement EPC 980 known as “Teresa” within 7 days.
Analysis shows that this block holds significant coking coal potential.
The aim is to establish a resource in accordance with JORC code. It is the intention of the company to sell the asset to help finance LNC’s commercial 20,000 barrel per day GTL facility. This is a positive development. We maintain our BUY on LNC increasing our base case DCF valuation to A$2.95/sh due to: (i) increasing our long term WTI Oil Price assumptions to US$65/bbl (prev US$50/bbl) – in line with Jefferies & Co; and (ii) reducing our WACC to 14% (prev 15%) as a result of a reduction in financing risks. Our 12 month price target is also A$2.95/sh (prev A$2.10/sh).
Emerald Coal Tenement EPC 980