MIM Holdings
MIM Holdings (MIM) has announced it will proceed with the development of the 6 million
tonnes per annum Rolleston open cut thermal coal mine in Queensland.
The company is committing $175m initially and a further $40m in 2007 to increase output to 8
million tonnes per annum. The $200m cost of the 109km rail link from Blackwater is being met
by Queensland Rail. This will ultimately be covered through rail charges to MIM and deducted
from the security the company is providing.
On our assumed long term realised thermal coal price of US$26/t and operating costs of
US$19/t, we generate a valuation of A$292m for the project.
The Rolleston development adds A15 cents per share to our valuation which now stands at
A$1.40. However, the earnings and cashflow impact are two years away and relatively
immaterial to the company’s short term outlook. More important in our view has been the
improvement in operational consistency and self-imposed exit from the loss making zinc
smelting businesses at Avonmouth and Duisburg.
Threat of corporate activity continues to support the stock relative to its peers in the Australian
resources sector and we retain our Buy recommendation.
ASX Code:
MIM
Share Price:
$1.43
Short term:
Buy
Long term:
Buy
Volatility index:
Medium
- Forums
- ASX - By Stock
- macca's view
macca's view
Featured News
Featured News
The Watchlist
FHE
FRONTIER ENERGY LIMITED
Adam Kiley, CEO
Adam Kiley
CEO
SPONSORED BY The Market Online