adani aust. head quits $11 bln coal project, page-3

On balance yes probably bad news. But I guess that depends on who a replacement is and what if any real issues exist.

As a current investor in LNC I thought I'd setup a simple DCF on the potential Adani Royalty income. That is, what is it worth today approximately. I make several assumptions which I briefly summarise.

Mine production starts in 2017 at 5mt and increases by 5mt every year until 2026 when it hits 50mt. It then stays at 50mt until 2036. (the royalty only lasts 20 years).

I assume inflation at 2% a year. Which means the royalty per tonne in 2017 is about $2.25. I use a discount rate of 10%... i do this in all my models so I don't get confused as much ;)

The price of coal doesn't matter... although I obviously assume that the mine actually gets into production etc.

So... a pretty simple model, and one IMO that is quite conservative (although it assumes the mine actually gets to production and the whoe royalty deal holds up... but whatever).

In short the above model gives an NPV of $445m. The current market cap of LNC mush be about $350m...

So... I'm not a seller.

ps - to the regular posters... I very much enjoy the banter!