Metallurgical coal junior has an operating mine
Q&A with Global Met Coal (V.GMZ) Chairman, CEO, and President George Heard
Can you describe your company and say what it does?
Global Met Coal (TSX: V.GMZ, Stock Forum) is a coal company focused on advanced stage, strategically located metallurgical (met) coal projects with investments in an operating mine in Mongolia and a high value met coal project in Alabama that is in the final permitting stage with forecast production in Q2 2013.
What is metallurgical coal?
Metallurgical, or met coal, is a rare geological commodity; a type of coal, distinguished by higher calorific value and carbon content, with a high free swelling index (FSI) and other critical components that differentiate it from other ordinary coal. Met coal is a rare commodity compared to other coals.
Why is met coal different from other types of coal? What is it used for?
Met coal is primarily used in the production of coke, which is an essential ingredient required to turn iron ore into steel. About 0.6 tonnes of met coal are required to produce one tonne of steel. Coke is made by heating cooking coal to about 2000°F in the absence of oxygen in a coke oven. The lack of oxygen prevents the coal from burning. The coking process drives off various liquids, gases and volatile matter. The remaining solid matter forms coke, a solid mass of nearly pure carbon.
What distinguishes Global Met Coal from other companies in your space?
Our global view of coal production is to obtain the highest margin possible. We are interested in only premium metallurgical coal and have a strong mining team, capable of developing assets world-wide.
Our strategy is to acquire high-grade met coal and increase production with cash flow from existing operations. We are looking globally to meet premium quality coals comparable to existing assets.
Tell me about your projects and what stages are they at?
The Mongolia met coal project is a producing mine, adopted to increase production and quality in one of the fastest growing coal mining regions in the world. Our Alabama project is a new mine at final permitting stages and expected to be in production in Q2 2013.
What’s been keeping you busy with the projects?
Negotiations of coal contracts with Russian steel mills for 2013 and permitting for Alabama to commence production has occupied most of our time.
Can you explain the economics of the project?
Our Mongolian production costs are forecast to be less than $100/tonne delivered to the customer. The current market price for this quality coal is forecast to be $100 to $230 per tonne in 2013. In Alabama, production costs are forecast to be less than $100/tonne delivered with a current market forecast of $170-$200/tonne for this quality coal.
What are the key challenges that you face in your business?
Fluctuating price for metallurgical coal and dealing with challenges of negotiating annual contracts to achieve high margin profits.
Who are the key members of your management team?
I have over 35 years in the mining industry, where I have been involved in all aspects of mine exploration, feasibility, development and operations. I have managed projects in Africa, Indonesia, Brazil, Mexico, Canada and the U.S. As Mine Manager, I participated in the successful development of a $600 million coal mine Joint Venture between Rio Tinto and BP in Indonesia.
What are the key goals for the remainder of 2012 and going into 2013?
Raise the profile of the company and secure project financing to increase mine production without diluting shareholders.
Why should investors be thinking of investing in Global Met Coal today?
Assuming we can execute on our business plan and provide near term cash-flow, the current share price is a fraction of the potential value.
Disclosure: Global Met Coal is a Stockhouse client.
Can you describe your company and say what it does?
Global Met Coal (TSX: V.GMZ, Stock Forum) is a coal company focused on advanced stage, strategically located metallurgical (met) coal projects with investments in an operating mine in Mongolia and a high value met coal project in Alabama that is in the final permitting stage with forecast production in Q2 2013.
What is metallurgical coal?
Metallurgical, or met coal, is a rare geological commodity; a type of coal, distinguished by higher calorific value and carbon content, with a high free swelling index (FSI) and other critical components that differentiate it from other ordinary coal. Met coal is a rare commodity compared to other coals.
Why is met coal different from other types of coal? What is it used for?
Met coal is primarily used in the production of coke, which is an essential ingredient required to turn iron ore into steel. About 0.6 tonnes of met coal are required to produce one tonne of steel. Coke is made by heating cooking coal to about 2000°F in the absence of oxygen in a coke oven. The lack of oxygen prevents the coal from burning. The coking process drives off various liquids, gases and volatile matter. The remaining solid matter forms coke, a solid mass of nearly pure carbon.
What distinguishes Global Met Coal from other companies in your space?
Our global view of coal production is to obtain the highest margin possible. We are interested in only premium metallurgical coal and have a strong mining team, capable of developing assets world-wide.
Our strategy is to acquire high-grade met coal and increase production with cash flow from existing operations. We are looking globally to meet premium quality coals comparable to existing assets.
Tell me about your projects and what stages are they at?
The Mongolia met coal project is a producing mine, adopted to increase production and quality in one of the fastest growing coal mining regions in the world. Our Alabama project is a new mine at final permitting stages and expected to be in production in Q2 2013.
What’s been keeping you busy with the projects?
Negotiations of coal contracts with Russian steel mills for 2013 and permitting for Alabama to commence production has occupied most of our time.
Can you explain the economics of the project?
Our Mongolian production costs are forecast to be less than $100/tonne delivered to the customer. The current market price for this quality coal is forecast to be $100 to $230 per tonne in 2013. In Alabama, production costs are forecast to be less than $100/tonne delivered with a current market forecast of $170-$200/tonne for this quality coal.
What are the key challenges that you face in your business?
Fluctuating price for metallurgical coal and dealing with challenges of negotiating annual contracts to achieve high margin profits.
Who are the key members of your management team?
I have over 35 years in the mining industry, where I have been involved in all aspects of mine exploration, feasibility, development and operations. I have managed projects in Africa, Indonesia, Brazil, Mexico, Canada and the U.S. As Mine Manager, I participated in the successful development of a $600 million coal mine Joint Venture between Rio Tinto and BP in Indonesia.
What are the key goals for the remainder of 2012 and going into 2013?
Raise the profile of the company and secure project financing to increase mine production without diluting shareholders.
Why should investors be thinking of investing in Global Met Coal today?
Assuming we can execute on our business plan and provide near term cash-flow, the current share price is a fraction of the potential value.
Disclosure: Global Met Coal is a Stockhouse client.
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