Ann: QUEENSLAND COAL ROYALTY REGIME, page-42

If anyone wants my little model , happy to share it by email , if you email me on [email protected] . Caveats , dyor and do not rely on my little workbook.

Its just a basic spreadsheet and you can chuck in estimated sale price of coal and it will adjust for new royalty regime SMR faces . It isnt a full blown NPV model incorporating interest/ debt amortisation, proper deprecation and tax treatment etc. So anyone going to lecture me on how to build these things dont go there as I do this for a living , I just couldn't be bothered building a huge technical model as I do when I am doing this for my day job, it was a half hour project before hitting the gym but was necessary to flesh out my thoughts that there is still plenty of upside here if your bullish on the macro view for coal as I am.

As with all my investing models I try and push the parameters to the conservative side , ie 11 MT tonnes of annual production maybe could be 12 or 13 in time. A P/E ratio above 5 if the company has low debt should also be well and truly possible. $ 100 AUD cost of production I think accords with some recent data I saw a qtr or so back that was part of the diligence documentation for the bhp acquisition. This maybe a little to optimistic with where inflation is now trending but for this sort of high level model its probably a good round number.

The thing to bear in mind with SMR and other coal companies like WHC is that they are no longer priced rationally by the broader market, so one can argue why even build a model as no rational pricing will ever play out with a coal company anymore while you have green dickheads now pervading all the major investment houses. So yes models like this maybe need a line added , discount for the world has gone green crazy . Even if that is true, one is going to enjoy I think some very good years of high paying dividends with SMR if you dont see the return in the form of capital appreciation and I would counter argue it is still helpful but to model it in some way to see the possible size of the prize when making an investment , is this worth me taking a risk.