KAL Energy (OTCBB: KALG) has been rated “Speculative Buy” with a target price of $2.00 by Beacon Equity Research Analyst, Lisa Springer, CFA.
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In the report, the analyst writes, “KAL Energy, Inc. is a junior exploration stage coal mining company. The Company, through its wholly owned subsidiary, Thatcher Mining Pte. Ltd., owns two coal concessions near the Mahakam River in North Eastern Kalimantan, Indonesia. The location of the coal concessions offers easy access to the ocean and opportunities to ship coal to markets in India, and North and Southeast Asia. Initial analysis of the coal concessions indicates reserves may exceed 192 million tons. The Company has secured funding for Phase I of its $2 million development plan, has commenced drilling at its coal properties to determine the grade and tonnage of coal, and plans to complete Phase I of drilling by the second quarter of 2007.
"We feel the Company’s high projected growth rate compared to that of its peers justifies a valuation at the higher end of the range. By the time annual production reaches 15 million tons, KAL could be valued at nearly $700 million, or $8.50 per share, based on a one time Price/Sales multiple and revenues of $675 million."
Other publicly-traded coal producing companies includes Foundation Coal Holding (NYSE:FCL), Allied Resource Partners (NASDAQ:ARLP), Alpha Natural Resources (NYSE:ANR) and Arch Coal (NYSE:ACI).
Beacon Equity Research Disclosure
The analysts contributing to this report do not hold any shares of KAL Energy (KALG). Additionally, the analysts contributing to this report certify that the views expressed herein accurately reflect the analysts' personal views as to the subject securities and issuers. The analyst(s) writing this report recognize and aspire to all of the CFA Institute Guidelines for Independent Research. Beacon Equity Research (“Beacon”) certifies that no part of the analysts' compensation was, is, or will be, directly or indirectly, related to the specific recommendation or views expressed by the analysts in the report. Beacon has directly been compensated nine thousand dollars by Onyx Consulting for enrollment in its research program. This report is based on data obtained from sources we believe to be reliable, but is not guaranteed as to accuracy and does not purport to be complete. As such, the report should not be construed as advice designed to meet the particular investment needs of any investor. Any opinions expressed herein are subject to change.
