I agree that the 2016 contract loss is well known. My point is that my understanding is that this is quite profitable for BRL and given BRL is running out of cash, is FCF negative and about to lose a key contract, this is going to put even more pressure on BRL to either sell more assets or try to raise fresh capital.
There is no doubt that coal is one of the most hated commodities out there and BRL's coal is reasonable quality, so maybe it is a good contrarian punt, but the major issue is around the cashflow.
Had they just stuck to the coking coal project and not wasted the $100m+ they had in 2012 (as they said they would), then they would be in a reasonable position to withstand this terrible market. But Hamish managed to waste all the money and now the company probably becomes insolvent. The market is bad, but Hamish was the major destroyer of value and has left the company in such a bad position that it is unlikely it will dig its way out.
BRL Price at posting:
1.5¢ Sentiment: None Disclosure: Not Held
