Target $4.61, page-2847

I have very few concerns. I've stated numerous times i'm simply waiting until the mid year report in Feb22 before i'll re-evaluate.

Nothing has occurred that has made me re-evaluate that. In fact, the higher coal spot price has definitely pleasantly surprised me. It basically makes the company on a similar PE as when i first bought back in May, even though the share price has doubled+. And that PE makes it a screaming buy.

Things i'm looking for; (in order)
- Production levels. Nothing else matters. We know prices are high, and they will get that eventually so the only thing that matters is this.
- Maules creek operating smoothly - with no future issues in sight.
- Received Pricing.
- Narrabri production. They said at the mid year result that the issues are behind them. I want to see that.
- General comments about the forward outlook.
- Coal quality improving. Coal sales "Other thermal coal" dropping and "High CV thermal Coal" improving. This will show that the narrabri high ash content issues (hence price discount) is resolved - might be hard to tell as stockpiles might still take time to clear.
- Met sales close to the 20% mark. Met sales dropped off a lot last year due to covid. With how met has surged so much recently, i hope they benefit greatly from it.

Money making machine
Ignoring costs, which sits at AU$74 / $US55.
- The 5 year average income is US$27.81 per tonne. (Note: royalties, tax, expenditure comes out of this)
- At the moment they are earning US$191.5 above their costs, which is 6.88x more than they normally are.

- Even back at US$140 (3x more profit potential than normal) is insanity pricing.
- 60-70% is NEWC quality coal. Which is 4.25x higher than last year.
- 10-20% of sales are met coal. Which is close to $US400 atm, 6.5x higher than last year.

It all points to a very profitable year.

Worst case scenario
The only nightmare result is if Maules creek and Narrabri both have serious issues.

Even if they unexpectedly lose 10% of their production, its not going to be the end of the world as prices are so high its irrelevant. As an example, that would be a repeat of April when Narrabri issues were layed out and the share price tanked from 1.80 down to 1.20 (crazy overreaction, as they only lost 1.6m in equity tonnes which is about 10%)

Tempering expectations
Having said that, both Maules creek and Narrabri production will be on the lower end of what most peoples expectations are.
- Maules Creek, management has already stated that their production is tilted to the 2nd half, hence this 6 months will be lower than the last 6.
- Narrabri. This is more speculation and pessimism. Management says that the issues are behind them but it might take time before they are back to working efficiently.


Pretty graphs
Here is the current pricing vs 5 year average.


Look at the difference a year makes. Here is last years;

Let that last chart be a warning. Things can change much faster than you expect.

However, enjoy the good times while they last