Target $18.72, page-6474

Getting back to some fundamentals

Post-review of the quarterly wasn't too far off so wanted to take a look at a few things for the coming year

firstly at current coal pricing, conservatively we are making around $100m pre-tax profit a month, $70m after tax... this equates to 13c per dividend-paying shares before tax per month.. not bad at all!

Assuming 13mt and holding royalty at 8.0% the biggest input drivers are the sensitivity around coal pricing realized and also exchange rates, so let's look at these first and the impact on the EV multiple


second up the costs holding exchange rate at 68c


what this is telling me is we are sitting at 2 - 4x EV multiple based in the coal price range and assuming all things stay the same ie. production not increased/decreased

I also think this logic is conservative as the market cap or EV multiple assumes the milestone shares are worth the same as ordinary dividend-paying shares... they clearly arnt

After the quarterly I also take comfort in the strategy around the assets currently on the market, I hope we can pull off a structured yet accretive acquisition from BHP but not holding my breath that it will materialize. Regardless I back the board for creating a positive ROE for shareholders with our $1.9bn of tax paid cash sitting on balance sheet!

I dont think anyone wishes for a cold european winter or anything but the tailwinds behind energy continue

I was hoping it would pull back a bit so I could add in the buyback blackout, I still will add and looking forward to the full year

In the interim remember we are making ~$2.5m a day after tax.....