By Samuel Indyk
Investing.com – Thungela Resources, which begins trading today in London and Johannesburg, has come under attack form a short seller on its first day of trading.
Boatman Capital released the report on the thermal coal unit spun-off from Anglo American (LON:), saying the company massively underestimated the environmental liabilities associated with closing its mines, which have a just five to 11 years of expected life remaining.
“Based on our estimates, Thungela’s environmental liabilities could be three times greater than currently reported and are more than the value of the entire company,” Boatman Capital said in a report.
“Our financial model attributes zero value to Thungela.”
Anglo American proposed the spin off of the unit in April this year, separating its South African thermal coal operations through their transfer to Thungela and then demerging from the group, before listing today in London and Johannesburg.
“We are excited to be listing Thungela today,” Thungela CEO July Ndlovu said this morning in a statement to the London Stock Exchange. “Our business consists of well-established, well-managed assets that produce high-quality thermal coal, with access to a world-class export infrastructure.”
“Thungela has an enviable cash cost position and is poised to deliver attractive returns to shareholders,” Ndlovu added.
Boatman Capital does not agree.
“We anticipate that the company may be able to pay some dividends initially thanks to Anglo’s price support and dowry, but we believe beyond that point the dividends will be unsustainable and the true value of the company will become obvious,” the short seller said in its report.
At 09:28BST, Anglo American shares are trading lower by 2.3%. Thungela Resources shares, which have commenced trading in London, trade at 125.5 pence per share, giving the company a valuation of around $250mln.
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