This article appeared in today's Fernie Free press plus I have added a second article about the same company back from a more optimistic time (January).
"Centermount suspend plans for new Elk Valley mine"
http://www.thefreepress.ca/news/202035511.html
http://www.thefreepress.ca/news/138010303.html
Much more positive news about the coal industry in general released today.
http://www.canadianbusiness.com/investing/back-in-the-black/
"New coal mine company plans to start production in 2016"
http://www.thefreepress.ca/news/138010303.html
Much more positive news about the coal industry in general released today.
Despite its many doubters, the coal industry could soon roar back to life
http://www.canadianbusiness.com/investing/back-in-the-black/
10 comments:
This announcement does not look as bad as it seems, coal prices are set to recover in 2014, and then they can resume their work. This just goes to show us how long it takes to bring a mine into operation.
Hmmm....sure glad I didn't have any money to invest in that venture!
8:23
Good point the coal market goes up and down, we all know that and it will go up and down at least 2 or 3 times in the next 5-10 years. We all also know that it takes 5-10 years from the purchase of a piece of property to coal being loaded on a train. So should we remain optimistic, of course.
J.T
I would not be optimistic about this project at all.Next year is 2014 and they expect prices to be up by then, so why would they stop working on the project now. Its not like they are a working mine.It was going to take them at least 3 more years to be a producing mine.My guess is that they came across something that makes the mine not feasable, and it has nothing to do with the price of coal today.
There is no need to write this mine off yet. They have spent 20 million on this project to date. They need to spend tens of millions to complete the feasibility and then they need to raise hundreds of millions to build the mine. The capital markets for this kind of money may not be there at this time. This may change in 2014 if the price of coal changes and optimism returns.
Generally people that invest in projects such as these understand the flucuating price of any given commodity.They also know that their return on investment is years down the road.For this mine to abruptly halt everything and vere off of the plan with the excuse that the price of coal is to low leads me to believe there is a whole lot more to this than what meets the eye.
Do you really think that if the price of coal is up next year that they can just pick up where they left off?
11.41 With the recent downturn in the met coal price and the uncertainty in the finical markets regarding commodities in general, the competition for investment capital is very intensive. Even few of the majors had to put some projects on the shelf. It is too easy to jump to conclusion regarding this particular project one way or another. One has equal chance to be wrong whether you choose to be optimistic or pessimistic. If the coal is good and there is enough of it, it will come out when the time is right. If the risk warrants development and timing is right, someone will do it.
As for this particular mine, halting a project which is still in feasibility stage when the market gets soft does not appear that unusual. Yes it takes many years to develop a mine, but you first have to get someone’s money to do it with. People and institutions that have lots of money are very averse to risk -this is why they have lots of money.
Too much selenium in the Elk River from the overburden; too much nitrogen from the explosives; reported deformities in fish; part of the Columbia River basin under international law -- and an active Sierra Club and associated groups that were successful in shutting down the Flathead Valley development. =. Stop Work Order for the Elk Valley.
These Groups won't stop until they have their Yellowstone to Yukon Crown of the Continent land set-aside. The Montana politicians are active HERE, but ignore the pollution that they have on their own part of the Flathead River from the Columbia Falls aluminum plant. (Do as I say, not as I do).
Next stop will be "stop the Greenhills strip mine on the Crowsnest, Oldman and South Saskatchewan River Basin". Stay tuned. Strange bedfellows will develop.
Anon 8:12 "One has equal chance to be wrong whether you choose to be optimistic or pessimistic. If the coal is good and there is enough of it, it will come out when the time is right. If the risk warrants development and timing is right, someone will do it.
I agree with the above,but someone is out 20 million dollars. There is a saying out there that goes something like throwing good money after bad.When you have a 20 to 30 year time frame for a mine the process does not come to a grinding halt because the price of coal came down this year.They know the price of coal will flucuate but that should not stop the long term investor if everything else is looking good.My only thought is that something else does not look quite so good as first anticapated.I do hope you are right though and when the price of coal recovers they will resume in the development of another mine in the area.
I do not think it is our job to worry about the price of coal. We seem to want to be experts on everything here.
I think most companies know exactly what they are doing.
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