At spot prices SMR is generating $1bn if FCF per year, all...

At spot prices SMR is generating $1bn if FCF per year, all royalties, taxes & sustaining capex included.




ASX300 inclusion on 18 September will definitely help… many local fund managers have this mandate.

Free float is about $900m, but traceable float (ex M Capital & Regal stakes, and potentially not counting large non-substantial holders) is just $650m/US$430m, so benchmark inclusion should allow a lot of more to hold it just to cover benchmark exposure, let alone alpha that funds what exposure to,

The owners are showing capital discipline and times the market well, and clearly have sensible strategic intention so I see minority shareholding in this situation as positive.

The share price jump from $2.60 has all been coal price driven… it still trades on 3x cold hard free cash flow, and from what I see is one of the top 3-5 best value stocks trading on the planet’s developed market exchanges.

Clearly only specialists & hedge funds have bought as vanilla fund managers don’t want to show coal exposure on their books , which is absurd so long as one believes that steel should be smelt and developing countries should build infrastructure & buildings, and developed countries too…

Despite Russia pushing all its PCI tonnes into the market, the price has held up well as the long term theme increasing quality of life in particularly the BRICS countries remains, and any suggestion this dynamic underpinning met coal or steel production is also seemingly absurd.

It might be a slow burn to re-rate the stock towards a more reasonable cost of equity capital of ~15%, and many new tonnes can be brought to market at better IRR via existing mine expansion. However US met coal stocks trade 4-5x FCF, so a SMR trading to $5 in the next year would be the rational outcome.