Thursday, September 23

Beacon Hill Resources

Online Stock Investing - Beacon Hill Resources tipped in Shares Magazine

(UPDATE : Tipped as  Tiddler to watch in the Times today (11.11.2010) and there was a RNS also published see - Beacon Hill Resources )

Yesterday Beacon Hill Resources - bhrplc.com - was tipped in Shares Magazine and it seems to have caused quite a commotion, with the stock up around 30% on the day and the bulletin boards being very active to say the least.

First of all we have to say congratulations to anyone who was already in BHR as presumably they are sitting on a tidy profit already. One bulletin board, that I had never come across before, LSE "London South East".

BHR 2 year chart with 50 and 200 day moving averages


3 month chart


So what did Shares Magazine say ? Here is a summary.

  • Do not hang around
  • A $55 million deal with an Indian coke manufacturer is set to complete this week (must be today then ?)
  • This will make the share price look very cheap.
  • This valuation gap should close quickly as the market sees Beacon’s progress in Mozambique and Tasmania.
  • Buy now before the true rally begins (the share price was around 13p when they said that - it closed the day at 16.75p.)
  • Global Coke is investing $55 million in exchange for a 26% stake BHR Mining and rights to buy coking coal from the Minas Moatize.
  • That values Beacon Hill’s 50% stake in BHR Mining at $106 million
  • Beacon Hill’s stake is therefore worth 26p per share - before the value of other assets are taken in to account.
  • An open pit mining trial will start in the next 8 weeks pushing production up from 10,000 to 40,000 tonnes per month.
  • At conservative selling prices of $60/ tonne, that equals $2.4 million revenue per month.
  • Output will increase significantly over the next few years.
  • The company plans to start producing thermal and coking coal from January 2012.
  • Global Coke will take 600,000 tonnes of coking coal p.a. and 500,000 tonnes of thermal coal will be sold to the domestic market. Leaving 900,000 tonnes of thermal coal for export.
  • They are also active in Tasmania developing the Arthur River magnesite project.
  • Beacon Hill hopes to be in production in the next 18 to 24 months.
  • Magnesia is used in the steel industry and as an ingredient for feed and fertilisers.
  • Export restrictions by China have pushed up magnesia prices.
  • Concerns about availability from China means Beacon Hill should see increased demand.
  • H1 results are due by end of September and are expected to have a positive outlook statement.
Meanwhile over on the LSE bulletin board the poster who seems to be the most knowledgeable is Margic21. He is very bullish saying 32p by Christmas after that he then sees 68-74p after which he thinks it could fall back to 24p or even 18p which would be a good time to buy as he sees it being at least at 120p by the Olympics possibly even 135 - 184p

He certainly seems to understand the company and is pretty specific with his share price action forecasts so I will be watching carefully to see what transpires.

Over on Businessweek on Sept. 3, however, Elisabeth Behrman wrote :-
"Anglo American Plc, the third- largest producer of steelmaking coal, is seeking an acquisition that may more than double output to meet rising demand from India and China.

Anglo is looking for assets with potential annual output of as much as 20 million metric tons in Russia, Mongolia, Indonesia and Mozambique, said Seamus French, head of the London-based company’s coking coal business. Anglo’s production of the commodity from its Australian mines was 12.6 million tons last year, according to its website"
Personally I've got no idea where the price will be heading, although short term up seems the most likely, but no doubt with much shaking of trees. Good luck to all holders and take care as the rise in the share price will quite possibly bring in the rampers and de-rampers, market manipulators and shorters etc... 

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