valuation

Last time i checked:

Credit Suisse: $1.50 target, >$2 unrisked valuation
BGF: $1.50 DCF (If I recall correctly)

I think people fail to realise that BTU is the only pure play coking coal (soon to be) miner on the ASX. Macarthur which is the closest comp is mainly PCI.

My valuation 2013: (INCLUDING BTU's 5-15% SUPER QUALITY PREMIUM - 1/2 Given to Stemcor)

High
2mtpa x ($340 p/t coal price - 80 p/t opex) = 520M EBITDA

Base Case
2mtpa x ($270 p/t - 80 p/t opex) = 380M EBITDA
Pre QLD flooding pre Japan equake price of coking coal

Low Case
2mpta x ($170 p/t - 80 p/t opex) = 180M EBITDA
This is lowest price during GFC of coking coal

So we have 3 EBITDA possibilities and 5.5x EBITDA is the industry standard metric - MCC, COK, GCL, etc

High= 520* 5.5= 2860m ($4.40)
Base= 380* 5.5= 2090m ($3.20)
Low = 170* 5.5= 935m ($1.43)

Current conservative mcap ~ 650m shares fully diluted * 1.18 = 767m

So I see limited downside and 3-4x return possibilities in 18 months time.

However this is dependent on the coking coal price, which IMO is only getting scarcer.

Also forgetting build risk, enviro which seem to be ok because Pure Energy has been mining there for years. The great spotted kiwi aint that rare!

Don't forget Japan needs to rebuild Sendai.

Also, L1 capital and Mathews capital are the saviest guys around: look at their websites ~ they are best in class.