The following interesting information was contained within NuCoal’s most recent quarterly information.
The investigation by the Independent Commission Against Corruption (ICAC) relied on a so called ‘fact’ that Exploration Licence 7270 was valued at $100m when Minister Macdonald awarded it to Doyles Creek Mining Pty Ltd (DCM) in 2008. This valuation did not and could not have applied at the time of grant as it was dependent on:
- DCM doing considerable work over an 18 month period; and
- Significantly improved world economic conditions and outlook.
This false premise concerning the valuation was used totally in 20:20 hindsight in ICAC and Courts to “establish” that something of very high contemporaneous value was “given away” at the end of 2008.
There have now been 2 independent valuations of EL 7270, by Palaris Mining (Palaris), in accordance with the VALMIN Code, at different times since 2009. The results are shown below including the valuation date, which is a critical component in valuations of this nature:
- Valued as at 1 July 2008 (valuation estimated in 2018), valuation range of A$0.9M to A$2.9M, Palaris preferred valuation of A$1.9M;
- DCM paid $2.1m for EL 7270 following its grant in December 2008, comprising $1.1m to the NSW Government for historical exploration spending by the State and an additional $1m to the University of Newcastle to establish a Frontier of Geoscience at the campus (a condition of the grant). DCM also committed to the establishment of a training mine if a project was developed at Doyles Creek.
- Valued at 1 November 2009 (valuation estimated in 2009) – valuation range of A$74M to A$124M, Palaris preferred valuation of A$99M;
- This valuation was the basis for the float of NuCoal in February 2010.
So why did the valuations change?
Between July 2008 and November 2009 DCM commissioned reports and studies on EL 7270, most notably mine planning and preparation of a Resource Estimate according to the JORC code. There was also a significant increase in the price of coal during this period due to the improved economic outlook caused by the responses of world governments to the global financial crises.
In summary, at the time of the granting of EL 7270 to DCM in December 2008, the Licence value was $1.9m and DCM paid a total of $2.1m and committed to a lot more via a training mine if they were lucky enough to ever prove that a) there was a viable resource there and b) that a project could be built at Doyles Creek.
It is (very significantly) factually incorrect to say that the Licence was valued at $100m when Minister Macdonald awarded it to DCM in 2008.
A full copy of the valuation report has been made available on NuCoal’s website. To view, please click on the link below:
http://nucoal.com.au/wp-content/uploads/2018/11/NUC187-EL7270-VALMIN-Code-Valuation-July-2018.pdf