What's happening?, page-28

why is 2-3x EBITDA a fair price for BT Mining? As you say, NID isnt worth much, and Stockton has 4yrs of life left (on a proven reserves basis, the measured resource seems >20yrs of life tho and imagine that is reasonably straightforward to prove up into reserves). Every other met coal co in the world - with much longer provable reserves trades at 1-2x EV/EBITDA, with generally much higher liquidity, no one-mine risk, etc. moreover BRL's own stock trades today with a $95mm EV or so against a look-through EBITDA of $150mm, so closer to 0.5x EV/EBITDA. of course part of the reason BRL trades at a discount is this structural issue we are discussing, so it is all circular.

but the fact remains, 2.5-3x EV/EBITDA would be a wildly favorable price for the Talleys and - I believe - is why a deal hasnt been done yet. The Talleys are prob playing hardball on price and the company is likely pushing back, using the reasoning above. the way to resolve this is to offer Talleys a stock-heavy deal (making them an even larger shareholder in BRL parent) but at a lower multiple. they would thus then benefit if/when the discount to comps unwinds (although they would not benefit from an immediate cash payment).

these situations are always hard but with the resolution of the legal cases, at zero cost, it seems impossible (to me) to lose money from current prices. BRL - on a lookthrough basis - is printing $20-30mm of FCF every quarter, at the current curve. as long as they resolve the Talleys issue for something under 3x EV/EBITDA (and even that would be far too generous, but whatever), I think the stock is easily a $1.5 stock in the immediate term.