Looking at performance so far and outlook for the June qtr this year i would expect SMR to post an EBITDA of around $49M for the year (1st half reported $18M, March qtr 400kt sales at $151 minus say $110/t FOB cost gives $16M, and lets say 'only' 300kt sales in June qtr at $161/t minus $110/t cost to be conservative gives another $15M).
Not bad for a company with a market cap of only $165M and the plan to increase production further later this year.
Surely with this cash flow SMR has to be a takeover target. Forgetting about possible foreign buyers there is Glencore and Yancoal who have been buying up madly recently from Rio and others in NSW and Qld.
But the producer with the most to gain would have to be New Hope Coal - they are Qld based and buying SMR would help diversify them into coking coal (they are predominantly thermal producers at the moment). In addition New Hope is having trouble with approvals at Acland in the Surat and SMR has the Range deposit which is a large, low strip ratio high quality deposit that would fit perfectly into New Hope's current Brisbane based rail and shipping operations.
Just my musings and i am happy to see SMR continue its growth as i think it can deliver great value but the takeover potential cant be ignored as bit of 'icing' - surely worth 90c just on fundamentals??
SMR Price at posting:
62.5¢ Sentiment: Buy Disclosure: Held
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