My thoughts remain largely the same, Loco. Like any high-cost...

My thoughts remain largely the same, Loco. Like any high-cost producer they were very leveraged to the commodity price, and this worked for a short while but ultimately fell apart (even though the met coal price has remained so strong) because as it turned out much of their volume ended up being thermal, or lower quality met getting poor index realisations. Otherwise, two key lessons for me from following this story:

1. be cautious of companies who rush toward production without doing the necessary study steps – this has stung BCB at Bluff, AGY, CXO and SYA in the lithium space, and TIE in the gold space. And watch the debt position like a hawk. That said, there’s also been a range of significant factors largely outside their control such as weather and rail/port constraints. These are harder to predict of course but early on it did seem like weather was copping a lot of blame for Bluff ROM underperformance when there was a high likelihood that other matters (i.e. geology) were to blame. I documented the frequent excuses/changes said about Bluff here in March 2023: https://hotcopper.com.au/posts/66755089/single. This was important to me because the constantly moving timeline, along with the lack of ROM production numbers (at least until Ruston started) were a red flag that management weren’t being as transparent as they could have been. It took them until July 2023 before they announced the strategic review and September 2023 for C&M. As for the vessels – when one quarterly noted vessels/sales pushed into the following period, fine – but when it happens again it becomes clear there is a wider issue outside their control. So far from memory every single quarterly has now referenced sales falling outside the reporting period - which means they never catch up, so is it really worth flagging on an ongoing basis?

2. at a very simple level, when an ASX sector is as small as coal and the major players are trading on such low EBITDA multiples, it’s just so much easier to play the big names - so any signs of a wobble and the money in the juniors will flee that way. Anyone chasing met/PCI exposure who went into SMR has gone +75% in 24 months, whilst in the same period BCB has gone -79%. Massive swing, right there.

It isn’t over though - whilst the cap structure has been blown out by the multiple raises (upside is far more limited now), if they can get Burton humming and predominantly spitting out higher-quality met there might be a turnaround in the works. Fingers crossed.