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Excel announced on Tuesday it had seized responsibility for the construction of its Millennium coal preparation and handling plant (CHPP) after it revealed construction had fallen three to four months behind schedule and capital costs had increased.
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UBS anticipated capital costs for the project would rise to $A110 million against a budgeted $A95 million.
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Excel warned at its annual general meeting in October that its earnings could take a $A10 million hit for every month coal sales were delayed. Plant completion is now expected in late April or early May this year.
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Both UBS and Goldman Sachs JBWere remained cautious on the stock, with UBS lowering its sales estimate for the Millennium mine from 300,000t to 100,000t for fiscal 2006. UBS also lowered its earnings per share projection by 10% to $A126 million.
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鈥淲e expect increased costs and delays to projects to be an ongoing feature in the resource sector and we remain cautious on stocks that have strong production/project profiles, particularly where they are exposed to weaker commodity prices,鈥� Goldman Sachs said.
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The analyst anticipated coal prices, particularly for the weaker coal brands, would be settled lower that Excel had assumed in its original $A150 million profit guidance.
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UBS agreed intermediate coking coals remained the highest price risk.
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Excel closed up 2.84% at $6.15 yesterday, after taking a 6.27% dive on Tuesday from $A6.38 to $A5.98.
