It is reported that Coal Energy maintained solid coal output in September, having mined 129,600 tonnes and produced 17400 tonnes coal from its waste recovery segment which is flat MoM.

On YTD basis, the company extraction surged 83% YoY to 389,000 tonnes during the first quarter of FY12. Coal production from waste grew 5% YoY to 52,000 tonnes. We estimate that Coal Energy manufactured 441,000 tonnes of coal during the period from operations in these two segments, or 68% more YoY.

The firm also disclosed that it’s preparing to launch a new long wall at Novodzerzhinskaya Mine by the end of October, which will increase daily mining at the subsidiary by 23% to 650 tonnes and by another 8% to 700 tonnes in November. Using IPO proceeds, Coal Energy also aims to boost mining mechanization at one of its production districts at its Chapaeva subsidiary promising to double daily mining there to 900 tonnes of coal starting May 2012. Among other announced expansion projects with more distant expected results is drilling work at one of Novodzerzhinskaya seams that will enable the mining of an additional 200 tonnes of coal. The work may be finalized by June 2012.

According to Phoenixcapital analyst “The news is positive for CLE. Coal Energy is demonstrating strong operating performance which will be further improved by the end of October after a new long wall at Novodzerzhinskaya Mine is launched, producing highly profitable coking coal. Even taking into account the recent easing of local coking coal prices, Novodzerzhinskaya is able to earn a profit of USD 147 per tonne, one of the highest among CLE subsidiaries. However, the mining increase since May disclosed so far, including Chapaeva offers an additional 70,000 tonnes of coal extraction cumulatively by the end of FY12 which is 4% higher than our estimate of 1.55 MT to be extracted during the year.

It said “That’s basically in line with expectations. We don’t exclude that in coming months, Coal Energy may announce some other expansion projects that allocate IPO proceeds and boost mining. We reiterate our DCF-based BUY recommendation with a decent 23% upside to the closure price of October 17. From a relative stand point, Coal Energy trades at a 5.7 EV/EBITDA 2011F multiple promising a potential 21% appreciation. The company will publish an end-October full year report for FY11, in which we expect to see EBITDA of USD 56 million. The event will be a strong short-term trigger for the stock.”