Prairie Mining receives approval for Jan Karski Deposit Development Plan
Emerging coal producer, Prairie Mining (ASX:PDZ) has reached an important milestone in the permitting process with its Deposit Development Plan for the Jan Karski coal project being approved by the Polish Lublin Regional Mining Authority.
Commenting on the significance of this development, PDZ’s Chief Executive Ben Stoikovich said, “The approval of the Deposit Development Plan is an important step in the permitting process for Jan Karski (project) and we now expect to be in a position to apply for a mining concession during the second half of the year”.
Stoikovich also noted that the company’s ratification of a power connection agreement signals the initiation of development activities at the Jan Karski exploration project.
The project is an ultra-low ash coking coal development located in Poland. PDZ has already released a positive Prefeasibility Study (PFS) which confirmed the technical viability and robust economics of the project, as well as highlighting its potential to become one of the lowest cost, large-scale strategic coal suppliers to be developed in Europe.
The strong project fundamentals and significant margins above steady-state operating costs are key to its compelling investment fundamentals, as is the fact that the semi-soft coking coal produced from the project will command a premium price.
Importantly, regional politicians confirmed their support for the project, and local government leaders commented on the unusually strong support generated by the community.
The Jan Karski coal project will create thousands of new jobs, while also making a significant contribution to the economic development of the region, suggesting that there is a strong chance of success in obtaining the formal mining concession application.
PDZ is expecting Environmental Consent and an approved spatial development plan during the second half of 2017. A granted mining concession will be valid for up to 50 years.
The company has now initiated works aimed at obtaining power grid connection for the project, having obtained the appropriate network connection conditions from a subsidiary of one of Poland’s major state owned power utility groups, which is the largest power producer and supplier in Poland.
Following the cooperation agreement with China Coal and the latest CD Capital Investment, combined with cash on hand and the net proceeds from the recently completed institutional placement, Prairie is in a robust financial position to accelerate developments at both its Jan Karski and Debiensko projects.
PDZ’s share price has responded positively to the news, up nearly 5% on the open. However, it is worth noting that the company is trading at a significant discount to the consensus price target of $1.47.
Even making comparisons with some of the more conservative valuations and price targets, PDZ appears to be undervalued. European based Mirabaud Securities LLP reviewed PDZ as recently as March, reaffirming its buy recommendation and price target of $1.02, in line with its DCF based evaluation of $1.02 per share.
This implies upside of 80% to this morning’s opening price of 56.5 cents.
It should be noted that broker projections and price targets are only estimates and may not be met. Also, share trading patterns should not be used as the basis for an investment as they may or may not be replicated. Those considering this stock should seek independent financial advice.
S3 Consortium Pty Ltd (CAR No.433913) is a corporate authorised representative of LeMessurier Securities Pty Ltd (AFSL No. 296877). The information contained in this article is general information only. Any advice is general advice only. Neither your personal objectives, financial situation nor needs have been taken into consideration. Accordingly you should consider how appropriate the advice (if any) is to those objectives, financial situation and needs, before acting on the advice.
Conflict of Interest Notice
S3 Consortium Pty Ltd does and seeks to do business with companies featured in its articles. As a result, investors should be aware that the Firm may have a conflict of interest that could affect the objectivity of this article. Investors should consider this article as only a single factor in making any investment decision. The publishers of this article also wish to disclose that they may hold this stock in their portfolios and that any decision to purchase this stock should be done so after the purchaser has made their own inquires as to the validity of any information in this article.
The information contained in this article is current at the finalised date. The information contained in this article is based on sources reasonably considered to be reliable by S3 Consortium Pty Ltd, and available in the public domain. No “insider information” is ever sourced, disclosed or used by S3 Consortium.