This seems to be where the hot money is going at the moment so I'm in for a few. Tipped in the In/C last week has the potential to soar like Uramin according to the other side. I haven't put the house on it but fairly pleased so far since buying yesterday.

Tipped by Shares Mag this week as a recovery play.

An exclusive report from James Faulkner of WatsHot.com

Expert tipster James Faulkner, whose recent comment on Range Resources caused such an increase in volumes that the company was forced to issue a statement on the matter, provides two new tips a month and regular updates on specialist small caps site WatsHot.com.

Although past performance is no guarantee of future success, and some tips have gone down in value, the average gain per tip as at 31st December 2010 across the 23 stocks tipped last year was 73.28%.

In this report, first published last Wednesday on WatsHot.com, the expert tipster takes a detailed look at coal mining and the stocks that could help you take advantage of increasing demand for the fuel. To read more insightful analysis like this from James in his daily column and get two brand new tips each month, join WatsHot.com now.

It may be dirty, but coal is set to return to the spotlight in 2011 as demand for cheap sources of energy heats up in the developing world. Latent trends are currently being exacerbated by the recent floods in Australia which have sent coal prices to a two-year high on the back of supply disruption in the world's largest exporter of coal. The situation is said to be worse than the 2008 flooding when the coking price moved above $300 per tonne for the first time, as the number of mines and transportation infrastructure affected is much greater. For a point of reference, the mines affected in 2008 took at least 6 months to recover from the interruption and return to full capacity. The latest rain comes after the country saw its wettest September/November period on record. In the past few months coal miners Rio Tinto, Xstrata, Vale, MacArthur Coal and Aquila Resources have all declared force majeure in the coal-rich Bowen Basin, allowing them to miss delivery commitments. In the week to 24th December, coal prices at the Richards Bay Coal Terminal in Queensland jumped 14% to an average $128.10 per tonne.

The fact that Australia accounts for almost two-thirds of the global coking coal trade points to continued price spikes in the coming months. Coking coal is a vital ingredient in steel-making, and unlike thermal coal it has no obvious replacement. With demand for coking coal remaining very strong indeed in India and China, and a move to a quarterly pricing system has facilitated higher price levels since it was implemented. The Steel Authority recently agreed to pay $225 per tonne to suppliers, a level that is 74% higher than the price it paid during the year ended 31st March 2010. Broker UBS forecasts that prices will hit $250 a tonne in the second quarter of 2011.

The outlook for thermal coal the form of coal used in power stations also looks bright. A report from Deutsche Bank said prices for thermal coal are likely to be 17% higher than expected because of global shortages over the next two years. The bank predicts that thermal coal prices will reach $118 per tonne next year and $140 in 2012. Here, too, the picture is one of rising demand exacerbated by constrained supply in key producing areas.

Rising prices have proved a catalyst for M&A activity in the sector. The most notable activity of late includes Rio Tinto's 2.2 billion bid for Riversdale Mining's Mozambique operations; Vallar's $3 billion deal to make a mining company from the coal assets of the Bakrie family in Indonesia; and Walter Energy's $3.3 billion bid for Western Coal earlier this year (on which WatsHot subscribers bagged a 180% profit). 2010 saw 27 coal deals, compared to 25 in 2009, with single mega-asset transactions accounting for 15 deals and up 50% on 2009 levels, according to Wood Mackenzie Group. This trend is likely to continue in 2011. Here are a few ideas of how to play it.

Churchill Mining (CHL)

Churchill has a potentially world-class project on its hands in the East Kutai project in Indonesia. Even in the project's current embryonic state, broker Astaire believes the company could achieve a sale value in excess of $300 million significantly greater than the firm's current market capitalisation of 114 million.(Now just 85m!) Whatever the eventual outcome, payback would be relatively swift. At 20Mtpa (million tonnes per annum) and a conservative cash operating margin of $20 per tonne, the project would generate free cashflow of $400 million per annum for at least 30 years. At a more realistic margin of $30 per tonne (based on $45/t revenue and $15/t costs), this increases to $600 million per annum. Recent studies have suggested that the production rate could be as high as 35 Mtpa. Getting the project into production will require deep pockets, with direct capital expenditure estimated at $1.2 billion. However, the company states that it looks forward to "moving swiftly into the next stage in the ongoing strategic process and bringing this large scale Project into development", and discussions with third parties are ongoing.

Risk Warning: The value of investments can go down as well as up. Investing in equities can lose you part or all of your capital. Smaller company shares can be relatively illiquid and thus hard to trade. And that makes such investments more of a high risk than larger company shares. Not all comments on WatsHot.com cause an increase in trading volumes. UK-Analyst.com is owned by t1ps.com Ltd which is authorised and regulated by the Financial Services Authority and can be contacted at 3rd Floor, 3 London Wall Buildings, London EC2M 5SY.

Beacon Hill Resources (BHR)

Rio Tinto's $16 per share offer for Mozambique coal developer Riversdale is good news for neighbouring Beacon Hill Resources. The Moatize basin in Mozambique is one of the last undeveloped fields containing potential to produce hard coking coal and Rio's move has brought it into the spotlight. Beacon Hill Resources already produces coal on a small scale from the Minas Moatize mine, and has fully funded plans to lift production in 2012 to over 2 Mtpa (million tonnes per annum), 30% of which is expected to be coking coal for the export market. The firm enjoys first mover advantage in the basin and the current infrastructure is capable of handling the planned ramp-up in production. Broker Collins Stewart expects the shares to be a top performer in 2011. The broker values Minas Moatize at 160 million, of which 68% could be attributable to Beacon Hill, implying a pre-funding NPV (net present value) per share of 55p.

Ncondezi Coal (NCCL)

Also operating in Mozambique is Ncondezi Coal, which is located in a separate basin 26km to the north of Moatize where the presence of coking coal has yet to be proved. The shares rose sharply in December in anticipation of a significant upgrade to the existing 1.8 billion tonne JORC Resource following a recently completed 76-hole drilling programme. Upon completion, the company announced that coal had been intersected on all previously undrilled blocks, and comprehensive results are due to be announced some time in the first quarter of 2011. If coking coal is present in significant quantities then the shares should fly; if not, they will probably fall back. This is therefore an investment for risk tolerant investors only.

Coal of Africa (CZA)

South Africa-focused Coal of Africa recently entered into an agreement to pay a total consideration of $75 million for the 1 billion tonne Chapudi Coal Project, which is contiguous with the firm's Makhado Coking Coal Project. Acquired from Rio Tinto Minerals Development Limited and Kwezi Mining Limited, the Chapudi Coal Project provides the company with an additional estimated 1.04 billion tonne JORC resource (of which 90Mt is Measured, 220Mt Indicated and 730Mt Inferred), which could potentially transform its existing 947Mt Makahdo Project into a major coal mining complex situated in the Soutpansberg Basin. Near-term upside could be provided from the results from the Makhado Project definitive feasibility study due in early 2011, or the results of the bulk sample pit being developed to support the off-take agreement with Arcelor Mittal. The shares traded as high as 300p back in 2008, but the recession came along as well as several operating setbacks, pushing the shares as low as 50p. They currently trade at 110p, and broker Evolution has a risk-adjusted 205p target

CZA Coal Of Africa looks like its recovering from a January set back. A double bottom can be seen on the chart and SP bouncing up from the support given their.

Long term chart



Short term chart



Fundies.

A P/E of just 9.4 going into 2012 looks far too cheap to me. Im sure some will say value it on NAV, and I understand that the NAV position is very favourable.

Coal of Africa Ltd

FORECASTS 2011 2012
Date Rec Pre-tax () EPS (p) DPS (p) Pre-tax () EPS (p) DPS (p)

Evolution Securities Ltd
28-03-11 BUY 5.82 1.13 35.50 6.70
Edison Investment Research
04-03-11 None 51.89 7.06 74.42 9.65

2011 2012
Pre-tax () EPS (p) DPS (p) Pre-tax () EPS (p) DPS (p)

Consensus 26.64 3.81 53.09 8.03

1 Month Change 0.16 0.02 0.14 0.01
3 Month Change -8.79 -1.45 -1.43 0.05


GROWTH
2010 (A) 2011 (E) 2012 (E)

Norm. EPS % % 110.90%
DPS % % %

INVESTMENT RATIOS
2010 (A) 2011 (E) 2012 (E)

EBITDA -4.82m 28.74m 62.99m
EBIT -23.75m m m
Dividend Yield 0.00% % %
Dividend Cover x x x
PER -20.62x 19.89x 9.43x
PEG f f 0.08f
Net Asset Value PS 29.41p p p

Trading Outlook 16/03/2011

Outlook



Expected developments during the next reporting period include:



Clarity and resolution of the situation at Vele.



Completion of the Makhado bulk sample tests at ArcelorMittal followed by the DFS.



Commissioning of Phase 3 of the Matola Terminals upgrade during March 2011, thereby increasing CoAL's export allocation from one to three million tonnes per annum.



Increasing the production profile at the Mooiplaats Colliery to assist in meeting the port allocation referred to above.



Progress the Rio Coal Asset acquisition, including finalizing terms with potential partners.

dyor.

Bullish item from Evolution on CZA

#ADVFN $CZA http://t.co/Sr9T88i

Nice to see the number of stock on loan (proxy for shorters) falling away pretty dramatticaly over the last few days.

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Data Explorers

25p now.

Beginning to interesr me,recent chart(up 11%today)off low with selling seemingly over?

Report from 4th Aug.

http://www.steelguru.com/raw_material_news/Exxaro_could_be_considering_a_takeover_of_CoAL/276980.html

">http://

Perhaps it needs to break above the downward channel,finish above 20p,worth keeping an eye on?

http://www.investegate.co.uk/Article.aspx?id=201209111226280025M

his is due news now,sp looks interesting,grom earlier.

Submission by BHE for FIRB approval took place on 23 October and a decision could be anticipated on or before 22 November 2012, following the standard review period of up to 30 calendar days.
and

http://www.bdlive.co.za/business/mining/2012/11/22/attractive-assets-now-coal-strategy-is-key

http://www.investegate.co.uk/coal-of-africa-ltd-%28cza%29/rns/bhe-confirms-receipt-of-firb-approval/201211280706521783S/

Australia's FIRB approves Chinese coal producer's plan to invest in CoAL
Melbourne (Platts)--28Nov2012/138 am EST/638 GMT

Australia's Foreign Investment Review Board has approved Chinese coal producer Haohua Energy International's plan for a $100 million share placement with ASX-listed Coal of Africa, CoAL said Wednesday.

In October, CoAL said it had agreed to the investment by HEI, a subsidiary of China's Beijing Haohua Energy Resources, after South Africa's Exxaro chose not to take up its option to participate in the development of CoAL's Makhado coking coal project in South Africa.

Exxaro cited negative sentiment surrounding global and local market growth prospects at the time of opting out.

HEI's investment in CoAL is expected to speed up the development of CoAL's projects and provide direct exposure to the world's largest coking coal market in China.

"Following the granting of FIRB approval, HEI and CoAL will execute an escrow release letter pursuant to which the deposit of $20 million currently held in the escrow account will be transferred to CoAL," CoAL said Wednesday.

Approval by Chinese regulatory authorities is expected to be achieved by the end of January 2013.

The placement deal will be the first investment outside China for HEI.

The company is based in Beijing and is involved in the mining, washing, export and sales of coal products. It is also the largest anthracite coal exporter in China.

CoAL operates the Vele mine in South Africa, which has capacity of 1 million mt/year of coking coal and is also developing the Makhado project, currently in feasibility study stage, that will produce 2.2 million-2.5 million mt/year of coking coal.

CoAL is also developing several thermal coal projects in South Africa.

Maybe South Africa's Exxaro are right not to continue ??

Millions of tons of coal around SA, mostly in inaccessible / uneconomic places.
One need to know if all these grand plans are practical and economically
feasible over the next few years, having consideration of other world
coal deposits, nearer economic coal markets.
Also refer to millions of tons in Tete province Mocambique miles form a market,
plus iron ore there.
That is a place where they could produce there own steel,
with coal and lime stone, but what about a market for iron ore and steel ????

Suggest you do not build up any near term hopes for this grand Chinese plan.
Bob

Suggest you do not build up any near term hopes for this grand Chinese plan

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Yes the inferstructure is a big problem,maling this more a long term opportunity for those with patience. I thought the recent news would be more positive than has been the case,still a profit(nowever small) is just that.Appreciate your input.

I am truly pleased you made a profit. I have no interest in anybody loosing.
As you know one can sometimes make money out of news items.
I have noticed that very good news is often short lived, and that one could
probably go short after a few hours of the good news, and profit from, a price
stabalisation which usually means a fall back, to more realistic levels.
More so than trying to go long on the good news.
Do you agree ?

I have spent years in East Africa -
not boasting, very interesting, but does need heavy investment as u say

I think your summung up is pretty much how i see it,quite often the same logic applies to bad news,where the market over-teacts,before finding a truer level.Takes a lot of nerve to trade in such circumstances,i'm a little less risk adversed in my old age.
As to CZA,i thought it near it's bottom and with pending news,thought it resonably safe? GL with your uivestments,but take care as their's some sharks out there?

.

http://www.asx.com.au/asxpdf/20130107/pdf/42c9hysz8kw4b6.pdf