Here is a simple (and perhaps simplistic) view of things:...

Here is a simple (and perhaps simplistic) view of things:

Optimistic possibility:
There are no delays and the current plan remains on course (EPBC Controlled Action proves no impediment)

Existing equity market price is: $24 x 2.4 = $58m (current_share_price x current_shares_on_issue).
A further $37m equity capital raised, resulting in total equity capital of $37m + $58m = $95m.
Additionally, $50m debt capital raised.

Then, by March 2018 the business starts earning an annual EBIT somewhere in the range $20m to $30m.
This will imply a debt-adjusted, after tax earnings yield[#] of somewhere between 10% to 14%.
(there may also be substantial benefits from front loading sales).

[#]: 0.7xEBIT/EV


Less optimistic possibility:
The Smith Bay site is approved, but comes with substantial delays & additional costs

Under this scenario, it is possible that the New Farm acquisition is delayed to the point of incurring an additional $13m in the effective purchase price. But I am here assuming that delays are fairly moderate so that the NF acquisition can be made withing the existing terms (by 29 Sep 2017).

Also, it is possible that the wharf design/construction comes with substantial cost increases necessary to mitigate environmental concerns. If the wharf costs blow out by a moderate 10%, then that may imply additional capital needs to the tune of $3m (including pre-development costs).

Thus, capital needs increase by a total of $16m.

Thus, instead of raising a further $37m in equity capital, a further $53m is raised, resulting in total equity capital of $53m + $58m = $111m.
Additionally, $50m debt capital raised.

Then, by perhaps August 2018 the business starts earning an annual EBIT somewhere in the range $20m to $30m.
This time we get a debt-adjusted, after tax earnings yield of somewhere between 8.7% to 13%.
(once again, this ignores any potential benefits from front loading sales).


Even less optimistic possibility:
The Smith Bay site is deemed unsuitable, and an alternative site is sought (say at Ballast Heads).

Now the question about timing becomes rather larger, as does the question about timing and cost impact on the acquisition of the New Farm estate.

Nevertheless, if we assume that the NF acquisition proceeds to the delayed timing and cost of the second scenario (on the basis that management is confident of successful completion of an alternative wharf), we can make some further estimates.

Under this scenario, the NF acquisition we still require an additional $16m in capital, but it's probably unreasonable to expect the new wharf (say at Ballast Heads) to be operational by by the August 2018 time frame. Even if the timing blows out by only 6 months (seems optimistic to me), then that means that KPT will have ownership of the much larger estate for for a full 1.5 years. This much larger estate can be expected to incur substantial costs in management and upkeep. Currently the much smaller KPT estate costs nearly $1m per year to maintain (employee, forestry and admin costs), excluding directors fees. If we assume that the much larger estate will incur about $4m in annual cash bleed (including directors fees), then that's an additional expense beyond the baseline plan of about 1.5 x $4m - $1m = $5m.

If we assume that wharf costs , at the less attractive local, this time blow out by 20% (instead of the very moderate 10% assumed for the second scenario), then the wharf will consume an additional $6m.

That means our total increased requirement for equity capital is now $16m + $5m + $6m = $27m.

Thus, instead of raising a further $37m in equity capital, a further $64m is raised, resulting in total equity capital of $64m + $58m = $122m.
Additionally, $50m debt capital raised.

Then, (optimistically?) by Feb 2019 (over 2 years away) the business starts earning an annual EBIT somewhere in the range $20m to $30m.
This time we get a debt-adjusted, after tax earnings yield of somewhere between 8.1% to 12%.
(once again, this ignores any potential benefits from front loading sales).