Thanks tbaulch!
Clearly AQC will now move from a reactionary price on unfolding opportunities/headline news, to a price based on forecasting and earnings potential.
As we all eagerly watch the AQC share price go up, I thought I would substantiate my comments from my previous post in case anyone thought I was pulling numbers out of thin air! (But please correct me if I am way out)
Here's how I came to an estimate of Dartbrook being a half billion dollar mine:
- Current thermal coal price is around US$43/ton (AU$59).
- Given the close proximity to developed infrastructure and establish labour force, the operational costs of this coal mine compared to say those in the Bowen Basin of QLD would be much lower. In any case, the best course to follow would be the QCoal model where almost everything to do with construction and production is outsourced to contractors. eg. Thiess, EDI Downer, etc.
- You would expect a contract OPEX rate of somewhere between AU$40-50 per ton, so an obvious annual gross profit on 5MTPA would be AU$50M-$100M. If we take a mean, then let's assume AU$75M gross profit, less administrative, corporate costs of AU$25M, we can assume a net forecast profit of AU$50M/yr when Dartbrook is producing.
- At a P/E ratio of 10 (quite conservative but making an allowance for some interest rate rises), this would value Dartbrook at AU$500M.
- The reality is that Anglo American built a working coal mine with Coal Handling Processing Plant (CHPP) and rail loop. Even though it has been in care & maintenance since 2006, it wouldn't take much to make it fully operational again. Therefore let's allow a CAPEX of AU$15M-25M. A fraction of what Bowen Basin coal mine owners paid in the boom (AU$200-400M)!
- Current Market Capitalisation has AQC at $95M. Pending approvals, one could expect Dartbrook to be operational and producing coal in as little as 2 years. Therefore, it would be realistic to value the company today at somewhere between $200M-300M. With shares on issue, the reflective share price should be $0.045 - $0.07. I am an eternal optimist and will maintain an open position to $0.08.
Hope this helps...and good luck!
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