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Authoritative Independent Monthly Share Selections Using Technical & Fundamental Analysis

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UK Coal - Vast landbank should trigger re-rating

December 2003

Investing in shares may lose you all or some of your money. Past performance is no indication of future performance. Some of the shares recommended here may be small company shares, which can be relatively illiquid and hard to trade and this makes such shares more risky than other investments.

Subscribers may recall that UK Coal, formerly RJB Mining, was one ofthe more fruitful new issues of the early 1990s.  After its flotation this small coal-mining group came from nowhere to win the auction for British Coal's assets during the latter's privatisation in late 1994. The £850m price it paid looked dear at the time, but later appeared justified as UK Coal realised vast amounts of cash by running down the substantial stockpiles of coal while posting strong earnings because of the high fixed price contracts that it inherited with the deal.  At one point the shares nearly tripled from 227p to 625p, but investors didn't spot the looming iceberg, which was that those contracts would only last until March 1998.  ...

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With small companies there is an above average degree of risk compared to buying blue chips. Please be aware that we have not assessed the suitability of any of these investments for you. The newsletter simply states a personal view and diarises the editor’s investment decisions. Please speak to your stockbroker or other qualified individual to ascertain whether any of these companies mentioned would form useful additions to your own portfolios. Past performance is no indication of future success.

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