Ann: Quarterly Activities Report, page-96

On 21 Dec 2021, when NHC was $1.97 / share i wrote the post below under a new thread titled: "This is getting ridiculous"

I am only raising this, because there are lessons to be learnt from focusing on the longer term and the bigger picture instead of daily market fluctuations. And more importantly, the current situation for YAL is even more ridiculous!

We don't need to go over the numbers again. Suffice to say that after tax, capital costs, corporate costs etc, YAL will generate the current enterprise value (circa $6.2 billion) in around 12 months, if prices stay elevated. Based on a lag of 3 months for pricing and xrate movements, the next 6 months is close to locked in.

And if prices fall of a cliff overnight, downside is extremely limited. Rember, YAL was a $5 billion (EV) company when NewC prices were sub $100/tn. This is because the sheer volume of their output (which includes 5 million tonnes p.a. of metallurgical coal!)

I believe the current price is being driven entirely by Cinda relentlessly selling on market. Whilst this is causing a lot of angst and frustration, ironically, it is also the reason we are getting this once in a lifetime opportunity. So funny to say, but we should be thankful!

So, i will repeat my final line from the earlier NHC post: "there is virtually zero downside at the current share price and a strong possibility of +100% returns over the next couple of years."

Post from 21 Dec 21:
"So, I have the current NHC enterprise value at $1.5 billion as at the end of December.

$AU coal price currently $232/tn based on US$165/tn and xrate 0.71.
$AU cash cost at Bengalla of $58, therefore cash margin $174/tn.

NHC share of salable coal produced = 8.3 million tonnes (assuming Bengalla ROM production of 13 million, yield 80% and NHC share of Bengalla 80%). This is all consistent with latest guidance in terms of ROM production and historical yield.

Cash generation = 8.3 million tonnes x AU$174/tn margin = $1.4 billion.

Corporate and capital costs are significantly less than $100 million, so free cashflow after capex is more than $1.3 billion. i.e. virtually the current enterprise value. If you ignore the background ESG noise and can stomach a bit of volatility my basic thesis is that there is virtually zero downside at the current share price and a strong possibility of +100% returns (in dividends or share price appreciation) over the next couple of years.