KGI report

$Golden Energy (AUE.SG)$
Diversified resources play
GEAR is a diversified mining and natural resources investment company. It started as one of Indonesia's largest coal miners and is on track to become the dominant coking coke player in Australia with the acquisition of BMC. It will further diversify into base metals that will be utilised for clean energy uses such as copper, cobalt, zinc and nickel.
Transformational year
It is on track to significantly expand its production capacity and profits with the BMC acquisition. The acquisition will cement GEAR, through its ASX-listed Stanmore subsidiary, as a major coking coal provider in the region. Coking coal is the key ingredient in the steel industry, whose demand is driven by China now and India in the future.
Primary beneficiary of Russian coal ban
The EU, UK and Japan announced plans for phase-in ban of Russian coal, so they have to source from other countries such as Indonesia and Australia. These countries and South Korea took about 55% of Russian thermal coal deliveries in 2020 according to BloombergNEF data.
Stanmore Resources (coking coal) will increasingly drive GEAR's valuations, which currently makes up 48% of GEAR'S fair value, while GEMs (thermal coal) drops to 42% of KGI's fair value, down from 85% in Aug 2021.