Hi all,
As some may be aware, I was pretty worked up when the RCPS were converted. I must say I think brucesterfers post is sensational, it is factual and not emotive and I believe is a fair account of what has transpired. I can see the xman has been absolutely blasting the company since. While I felt that way at the time, it is not going to help moving forward. My estimate of intrinsic value was around 30 c prior to RCPS conversion and dropped to around 20 c post conversion (that is the 30% haircut we have taken that xman is so cranky about). But I still believe there is material upside to 20 cents if they can increase production from other permits (eg Buller) over the next few years. For this reason with the share price around 12c I am absolutely a holder and would not consider selling unless the coal price goes to the toilet.
While we can debate what I believe was a management error in the past till we are blue in the face, and no doubt this along with the political environment killed the share price momentum we had, I believe it will be cold hard cash flow that decides where we go from here, and by paying out that facility so quickly, we are drowning in it.
They made a mistake in my view, but there is no point throwing out the baby with the bathwater. 12 cents way to cheap for this business and the opportunities that lie ahead.
While the political environment far from ideal, my take is no more new supply from NZ to compete with BRL. IN a commodity business, this is a good thing.
BRL Price at posting:
12.5¢ Sentiment: Hold Disclosure: Held
