NWR Heads for Five-Month High as Coal Price Rises to 2008 Level
New World Resources NV shares gained for a fifth day, heading for their highest close in more than five months, as an improving outlook for the global recovery drove the price of thermal coal in Europe to a two-year high.
The stock jumped 2.1 percent to 233.8 koruna at 2 p.m. in Prague. A close at that level would be NWR’s highest since June 21. Almost 2.2 million shares changed hands, or more than four times the daily average over the past three months.
Stocks and commodities rallied worldwide after President Barack Obama agreed to extend U.S. tax cuts to aid the recovery in the world’s biggest economy. Benchmark coal derivatives were unchanged today in Rotterdam after climbing to $112 dollars per metric ton yesterday, the highest since November 2008.
“NWR is currently negotiating prices of thermal coal with clients including CEZ AS,” analyst Jan Tomanik at Prague-based brokerage Wood & Co. said by phone today. “It is very likely the price will go up” from the 63 euros ($47) a ton at which the company has been selling its coal so far, Tomanik said.
The stock has gained 14 percent since Nov. 30 when NWR said its bid to take over Lubelski Wegiel Bogdanka SA failed after management and some shareholders at the Polish rival demanded more than the price offered. On Nov. 26, the stock fell as much as 4.2 percent after Parkiet newspaper reported NWR may offer to pay for Bogdanka with its own shares instead of cash.
“The stock was previously under pressure as there was a risk NWR might issue new shares and sell them to Bogdanka shareholders at a discount from the market price,” said Tomanik. This threatened to dilute the value of the existing shares, he said. “This risk factor has now been eliminated.”
NWR stock on Nov. 19 fell 3.6 percent, the most in almost six months, after the miner reported third-quarter profit that missed analyst estimates because of lower-than-expected output and coal sales. The company remains “on track” to meet its full-year output and sales targets, Chairman Mike Salamon said in the earnings statement.
“As important as prices are volumes in the fourth quarter,” said Tomanik. “I think they are on their way to meeting their targets and hence the fourth quarter could be regarded as positive. This may be partly priced in.”
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