I agree with comments above. BRL is currently trading at...

I agree with comments above. BRL is currently trading at discount to NTA and, after a difficult 2 years, should have a much more stable and profitable 12 months ahead of it.

I have two comments based on a read of this years financial statements which I think mean we are likely to see upside from the management forecast EBITDA and potentially a much more positive cashflow this year compared to last year.

Export Coal EBITDA In FY20 when coal averaged USD151/t the export business (65% share) made $43m EBITDA. In FY21 with coking coal averaging only $116/t the export business still made $19m EBITDA. The current management forecast for FY22 is for an average coking coal price of USD180/t but only a $34m export EBITDA. It looks to me like there may be some conservative assumptions regarding FX/volume/product mix in their estimate. After two difficult years, I would expect management to be conservative but I would expect to see some upside in the export EBITDA play out over this year if current coking coal prices are sustained.

Cashflow - I think there is about a net $15m of positive one off cashflow items this year compared to last year (over and above the forecast increased EBITDA/profit).

• Tax $10m upside - Tax is effectively paid a year in a arrears. At 30 June 2020 there was $18.6M of tax due based on the much more profitable FY20 financial performance. Consequently in FY21 $18.2m of tax was paid. This year, with much reduced profits due to COVID 19 and low coking coal prices, at 30 June 2021, there is only $4.6m due. This is $14.2m less than last year. I have estimated a $10m saving as BRL may elect to pay additional provisional tax in FY22 for the more profitable FY22 financial year.
• Debt repayments $5m upside - In FY 21 there was $16m outgoing debt repayments in the cashflow, at 30 June 2021 there is only $10.4m of current borrowings which will be mostly the finance lease payments in BT mining.
• Deferred consideration $3.6m upside. Payments in FY21 were $4.6m, at 30 June 2021 the current liability is just $1.0m which is the final payment for the BT mining acquisition.
• Rehabilitation $3.8m downside - There is $3.8m current rehabilitation liability in the parent which will relate to the closed Canterbury mine.