BRL (ASX) up coming 1/4 report

Originally posted by rsah: ↑

Good point. It is more like 76% of spot price(according to the last presentation deck and not 80% any more).

If they sold 2 months worth of production out further than the last quarter, then the damage is far more. Coking coal prices are 200+$ over the next 6 months. So we are at a US$20 difference between price received and spot, which would equate to NZ$5.6 million gap, if indeed all was sold beyond October. I hope the futures market is not deep enough to allow them to sell longer!

My concern is not the last quarter. My worry is that they are going to sell an even bigger % of production even more aggressively in the next few months. Logically, if you are a seller at $180, you got to be an even bigger seller at $220.

And this is what I mean by management not being smart. Any basic analysis of the futures market price would immediately tell you panic is in the air. BRL management CHOSE to believe (incorrectly as it turned out) that the market is not interesting because the future prices are not much higher than current prices (as they were, back in June). Either they completely dropped the ball on "hedging" (as one possibility) or their partner Talley's is willing to settle for current prices and wanted to lock in their unbelievable good luck. I mean US$180 is far far beyond what Talley's must have expected when they made their original investment...so they are raking in huge profits, relative to their original expectations.

What I fail to understand is the need to hedge at all. If the market was balanced and could go either way, you should hedge. But coking coal is not the only one in panic mode...iron ore is far higher than analysts expected, and steel prices around the world are at near records. The stockpiles of met coal are low...and the high steel margins would suggest a strong ability to pay higher met coal prices (as well as high iron ore prices). In short, there is zero signs that met coal prices are set to stabilize, never mind fall. Just look at December 2019 prices...already at US$192 and rising.

As for people who believe $100 million a year is happening at BRL...I am not so sure, if the management keeps doing such "hedging". You need to set your sights lower...try $90 million and falling. If the release next week boasts about how much more they have hedged, well...you will know how truly incompetent this management has turned out to be. And reduce your cash flow estimates towards $80 million and lower.

Expand

Originally posted by rsah: ↑

Good point. It is more like 76% of spot price(according to the last presentation deck and not 80% any more).

If they sold 2 months worth of production out further than the last quarter, then the damage is far more. Coking coal prices are 200+$ over the next 6 months. So we are at a US$20 difference between price received and spot, which would equate to NZ$5.6 million gap, if indeed all was sold beyond October. I hope the futures market is not deep enough to allow them to sell longer!

My concern is not the last quarter. My worry is that they are going to sell an even bigger % of production even more aggressively in the next few months. Logically, if you are a seller at $180, you got to be an even bigger seller at $220.

And this is what I mean by management not being smart. Any basic analysis of the futures market price would immediately tell you panic is in the air. BRL management CHOSE to believe (incorrectly as it turned out) that the market is not interesting because the future prices are not much higher than current prices (as they were, back in June). Either they completely dropped the ball on "hedging" (as one possibility) or their partner Talley's is willing to settle for current prices and wanted to lock in their unbelievable good luck. I mean US$180 is far far beyond what Talley's must have expected when they made their original investment...so they are raking in huge profits, relative to their original expectations.

What I fail to understand is the need to hedge at all. If the market was balanced and could go either way, you should hedge. But coking coal is not the only one in panic mode...iron ore is far higher than analysts expected, and steel prices around the world are at near records. The stockpiles of met coal are low...and the high steel margins would suggest a strong ability to pay higher met coal prices (as well as high iron ore prices). In short, there is zero signs that met coal prices are set to stabilize, never mind fall. Just look at December 2019 prices...already at US$192 and rising.

As for people who believe $100 million a year is happening at BRL...I am not so sure, if the management keeps doing such "hedging". You need to set your sights lower...try $90 million and falling. If the release next week boasts about how much more they have hedged, well...you will know how truly incompetent this management has turned out to be. And reduce your cash flow estimates towards $80 million and lower.

Expand

Yes well, rsah, you did mention that perhaps Talley's has had a say in the hedging strategy. perhaps Talley's insisted on it. Not much BRL can do if that is the case. Anyway, it's not like it's all being hedged

Would a bit of hedging also entice a broker to be more inclined to cover the stock? Think this was mentioned previously sometime

What do Bell Potter say about it, Viney ??

And let's see what the Qtrly says

When the hell is that to be or not to be appeal going to be announced?????

(20min delay)
Last 78.0¢		Change 0.025(3.31%)		Mkt cap ! $149.2M

Open	High	Low	Value	Volume
75.0¢	78.0¢	74.5¢	$14.06K	18.55K

No.	Vol.	Price($)
2	1215	0.630
0	0	0.000
0	0	0.000
0	0	0.000
0	0	0.000

Price($)	Vol.	No.
0.780	9139	1
0.785	3532	1
0.790	10000	1
0.800	42871	2
0.815	6538	1

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up coming 1/4 report, page-27

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