a balanced post by our own standards?, page-2

I've been about even thanks Swiss Gnome. Bought and sold twice and didn't hold long.

It can't be crazy to hold at this stage. Apart from the fact it may be arguable that the bottom is near, CCC has been known to rally hard for absolutely no reason at times.

I'm not sure its priced for complete failure though. This is how I'd calculate what CCC shareholders are paying for their 74% stake in CCL:

Market Cap $21m
Converts $15m
Royalties $11m
Total $47m

Then when you consider the value of CCC, you need to first look at debt there. You have.

Bank debt $25m
EDF debt $11m (booked as deferred revenue)
Current provision rehabilitation $3.7m
Other debt $2m

Total debt/non trading liabilities $42m.

Therefore, current market cap of CCC implies a value for CCL of $77m. (I've left the BEE loans out of this, need to look back at those one day to remember how it works).

If you believe recent speculation that Vlak margins are perhaps $9 a tonne, times 1.3mt budget is $12m. Lets say its worth 4x that or $48m, and then 60% may be for CCC (although terms of the JV are a secret). Anyway, that $29m of value there.

Then Penn. Well, you can take 600,000 forecast coal at $53 cost and $80 revenue and get about $16m. Then have value of the hedge. I think I will just use JB's net $15m cash number, albeit boosted by the hedge and multiply by 4 giving $45m.

That gives $74m. Of course you need to deduct the negative value of the corporate structure as well. Just deducting 4x admin costs alone of $11m destroys the picture.

There are many way to look at it. Some may place a value on Dewitt. Some may want to use higher multiples of cash flow due to long mine lives or just the fact they see this as a low in coal prices.

Looking at CCC for the first time for a while, the balance sheet is certainly a lot cleaner. It could clean up further. They say they are renegotiating the converts and the bank debt. I guess they would like one corporate facility to take out the lot. It would have to somehow take into account that the hold co converts are not the problem of the BEE. I'm not sure that can be done.

Its a bit depressing just thinking about it. More financing fees coming up.

One thing I would say again looking at the accounts is that the EDF facility was reduced by $5m last financial year. That would have accounted for $5m of the operating cash burn I think. The negative side of that is that $5.8m of EDF "debt"is current so yet more cash that will have to come from somewhere. (I know its repaid in coal but same difference).

Overall it remains a sell for me but I can appreciate its not as easy to call as it was with the stock approaching 2cents, Vlak going very well and Penn perhaps getting going properly.