Companies: CBM   

s foreshadowed by Growth Company Investor, Cambrian Mining plans to bid for Coal International as part of a general restructuring.

Mark Burridge, who took over as chief executive of ex-AIM star Cambrian last May at the nadir of its recent stock market performance, has unveiled a long-awaited strategic review, with the intention of slashing the discount between the company’s 157p share price, claimed net assets of 160p and listed investments worth 228p a share. Under the new plan, Cambrian intends to make a paper bid to take its stake in 34 per cent-owned Coal International from 34 per cent to 100 per cent, ‘most likely by way of a share exchange’.

The review also envisages Cambrian accepting a full bid for or major participation by another industry player in its Western Canadian Coal, where it holds 41.5 per cent with an entitlement to significantly more and which recently predicted a doubling in its coal contract prices for 2009. In addition, the company is considering either selling its 56 per cent stake in AIM-quoted oil technology developer Xtract Energy to ‘long-term investors’ or distributing its shares in Xtract to Cambrian’s own shareholders.

Burridge became chief executive when Cambrian was still smarting from disappointment over its former major investment, Asia Energy’s Bangladesh coal play (though Cambrian cashed in many of its chips before the debacle happened). Buoyed by strong coal and gold prices, he says the idea is to turn the company from an opaque and elaborate holding company into a simplified, ‘transparent’ mining group with primary operations in coal and gold antimony.

Some have asked why Western Canadian, whose shares have surged from 143p where Growth Company Investor highlighted them last month to 249p today, does not bid for Cambrian, since its present AIM value of £255 million significantly exceeds Cambrian’s £153 million at 157p, up from 76p when Growth Company Investor mentioned the company in February. Shares in Coal International have, by contrast, eased 1p today to 37.5p, though still ahead of our speculative recommendation at 25.25p in March, which some analysts suggest could be because a share deal, rather than cash, is what is contemplated.

If coal remains in favour, the Cambrian restructuring should continue to win stock market favour.

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Cambrian Mining	AIM	£28.36m	24.00p	0.25p
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Other company articles:
Cambrian changes its spots			30/06/2008
Cambrian bids for Coal			29/05/2008
Cambrian revamp pleases			07/04/2008
Exploration Insights			03/03/2008
New funding for Coal International			23/05/2007