 "Currency woes, low coal price delay Griffin Coal's stake sale")
The sources indicated that though the problem is not specific to the company, these issues may not be encouraging in terms of valuation.
"Australian dollar is historically and futuristically weaker than US dollar. But currently it is (slightly) higher than dollar or equal. Strong Australian dollar is not good for the export economies. All Griffin Coal are in Australian dollar, whereas the realisation will be in dollar," the sources told PTI.
"The coal prices are down by almost 30 per cent when compared to three years ago. It used to be $120 but now it is hovering around $90. These are not specific to the company. It is larger picture of the current situation. Current situation may undermine the true value of the project," the sources added.
The total cost of the project is 1 billion Australian dollar with 70 per cent debt and 30 per equity, the official said.
Tapan Trivedi, a senior analyst from JRG Securities is of the opinion that the Australian dollar is expected to get weaker against dollar in the near future.
"On May 7, the Australian Central bank unexpectedly cut its key interest rate by 25b bps to 2.75 per cent to kick start the loosening economy and bolster long-term investment.”
"However this has further weighed the trend in Australian dollar which recently slipped to 1.01 levels. We feel the Australian dollar might further fall down below the critical 1.000 mark in medium term," Trivedi said.
Lanco had earlier said it had appointed an Australian Bank as consultant for the total project finance.
The total coal project comprises three components-operating mine, development of another mine and port.
Lanco COO (Finance and Accounts) T Adi Babu said the equity dilution in Griffin Coal may take a year as it expects necessary approvals for the expansion of Berth 14A Bunbury Port in six to nine months' time.
"The idea is to expand the port facility to 12 million tons coal exporting capacity per annum. Some approvals have come. We are expecting some more in 6 to 9 months time. We want to show the market some value before raising funds," Adi Babu said.
Currently Griffin Coal exports around one million tons from its Australian mines.
"After getting approvals a DPR will be done. Once the DPR is done we will come to know what the total cost of the port project and also revenue model will be. It will take another three months," he added.
Company Secretary and Chief Financial Controller of Griffin Coal, James Riordan in an affidavit to the Australian court had earlier said the coal miner forecasts that for the year ended November 30, 2013, it will be cash positive by around 80 million Australian dollar on a standalone basis, based on the agreements it had and will have agreement with other companies.
Lanco is pumping almost 10 million Australian dollar per annum to keep the Griffin Coal operations going on.
Adi Babu said Griffin Coal is in advanced stage of negotiations with Australia-based Qube Logistics to sign an MOU for transportation of coal from mine to port.