UPDATE – 18:13PM – We have been watching BUMI throughout the day today and noted the heavy volume relative to recent weeks (see below). There was a 2 way pull but towards the close and into the auction in particular they were well bid. I expect a news update in the next few days and the end game in this saga finally nearing (we think it has a 4 on the front of it). The technical structure below is as bullish as they come.
This mornings RNS Trading Statement from Bumi is not new news to the market and it seems that management are getting to grips with costs and operational issues going forward with Berau – the primary asset they look likely to end up with once the split is complete. If the coal price improves during 2013 then there should be some real operational leverage to the bottom line.
Here’s the highlights –
Trading Update FY 2012
* Bumi plc launches major review of capex programme
* Mine plan being reviewed against a backdrop of weak coal prices
* Berau on track to meet 21mt production for 2012 – production expected to
increase to 23mt in 2013
Outlook
Given the weak coal price environment, the Company has focused on lower cost
pits and deferred some of its expansion plans, particularly the overland
conveyor and power plant. The Company continues to target a medium term
production target of 30mt per annum.
Commenting on the full year, Nick von Schirnding, Chief Executive Officer said
“Our near term strategy is very clear: to effect a separation from Bumi
Resources and to maximise value in our operating subsidiary, Berau. We have
taken immediate steps to mitigate the on-going impact of lower coal prices by
adjusting the mine plan for Berau, targeting lower stripping ratios and
reducing hauling distances. Expansion must be profitable and sustainable and we
believe that the conditions are not right for the c$288m proposed overland
conveyor and power plant projects at Binungan to proceed at this juncture.
These projects will be revisited as market fundamentals start to improve. In
the meantime we will focus on further initiatives to drive down our cost base
and ensure we have optimal operating management in place across our business.”
Seperately, the Telegraph is reporting renewed calls by Nat Rothschild for action against the Bakries in relation to the alleged impropriety over company funds and now even Chairman Horn-Smith’s resignation. There is even mention of an EGM being called to replace the Board now that the Takeover Panel ruled the Bakries and Tan a “concert party” and so restricting their voting rates. This is a smart move by Nat.
The pressure gauge has been nudged a little higher again…