Prague-listed energy group New World Resources (NWR) is looking for a partner from within the Polish mining sector to help develop its Dębieńsko mine project, the Polish daily Parkiet reported on Monday.
“In our opinion, the market, and Czech retail investors in particular, will take this morning’s news positively,” analyst Bram Buring of the Prague-based brokerage Wood & Company said in a note to clients.
“We believe that it is logical, in view of Dębieńsko’s higher-than-expected development costs and flat to lower coal production in Poland overall, that NWR would be sounding out potential local partners.”
Last month, NWR, whose assets include the Czech coal mining group OKD, announced it was suspending work at Dębieńsko pending a review of the project, citing concerns about the costs of desalinating mine water and bids from contractors for driving the main slant shaft, which exceeded initial estimates by 10-20%.
According to Parkiet, Polish mining company Jastrzębska Spółka Węglowa (JSW) held inconclusive talks about a partnership with NWR, citing a spokeswoman from the Polish company.
Meanwhile, the CEO of leading Polish thermal coal producer Lubelski Wegiel Bogdanka said the company was not in contact with NWR while Katowicki Holding Węglowy’s (KHW) president has said that it has not been contacted.
Wood & Company’s Buring said that at current coal prices and development costs, the brokerage sees Dębieńsko as a zero net present value (NPV) project.
“[But] it is very important for NWR as one of the limited growth opportunities for the company. Existing operations are unlikely to show a significant improvement in output or profitability until new fields come on line in 2014-15.”
NWR, controlled by Czech billionaire Zdeněk Bakala, holds a 50-year mining license, granted in 2008, to extract coal from Dębieńsko.