Finally read through the numbers as I'd been considering SMR previously, while the headline might sound amazing, and the story of a small miner buying a big asset may seem tempting, I think the upside is much more in the more established players. There's more than a fair amount of risk, and the transaction doesn't complete till June 22, so you're betting on the met coal bonanza to stay till 2023/24 to help them rapidly deleverage from a heavily leveraged situation.
CRN own their assets at 100% level, so that 15Mt is actually THEIR 15Mt production, this is not true for Stanmore.
Stanmore in this presentation reports on a 100% which is disingenuous, since Stanmore will only have 80% share in Dampier, so actual production attributable to Stanmore is around 9*0.8 = 7.2+2 (existing) = 9.2 Million Tonnes per annum.
Further CRN will be debt free come December, whereas SMR will have 625M USD of debt tagged on.
Finally SMR have noted they will need to raise 600M USD (810M AUD) through equity. Assuming a raising price of $1 which seems reasonable for a 300% of SOI increase, then that is 810M new shares.
New SOI = 810+270 = 1080M SOI
At $1 that would make their Market Cap 1080M, and Enterprise Value 1150 + (625M USD or 850M AUD) + 40M Existing Net debt + 75M Internal Sources (I have included this as debt but they don't clarify) = 2.13B AUD.
Compare that to CRN, market cap of 2.2B with net debt of 0 (proforma 31 Dec 2021), who has larger scale (almost 2/3 larger than SMR PF, and that is excluding thermal coal where the end of the Stanwell Rebate will bring additional potential), diversified operations (US coal to offset partially offset China/AUS risks), and lower costs (much lower on the cost curve than BMC), and this looks much more expensive than CRN already.
Furthermore CRN will be stockpiling cash through to Jun 22 when the SMR transaction completes, whereas SMR will only begin earning from BMC/Dampier in 7 months.
The transaction isn't expected to complete till June 22. Met Coal forward prices are expected to cool substantially by then, so the bulk of this bonanza could be missed. Don't get me wrong, if Met coal sticks to 160, it'll still be reasonably priced (though very heavily leveraged), but I think those buying today may be doing so with blind optimism which doesn't match the facts.
Finally GEAR owning 75% is a bit of a red flag for me, though this risk is with CRN as previously seen by the board focusing on serving just their Main holders interest rather than all shareholders (borrowing money to payout cash to their owner, and then diluting raising capital from investors).
IMO you're better of buying one of the established Met Coal miners like CRN if you want to bet on the price bonanza rather than a company with an admirable ambition to execute a company making transaction, but one which carries heavy risks.
IMO, Personally, I don't see SMR having more upside than CRN in the next 12 months, barring some hype bubble.
Happy to hear any counterpoints/analysis of this transaction beyond the hype headline.
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