The announcement is quite clear that this is a prepayment loan, half purely a cash advance and half a deferral of the existing rebate agreement. The announcement is also clear that half of this agreed volume will be at the prevailing market price and half will be at a fixed forward curve higher than current spot price. It is very clear that there is no more cheap coal under this deal, it is simply a prepayment loan.
With short term liquidity risk now addressed via an additional $300m of facilities plus $160m existing cash and growth capex coming to an end shortly the market will start to focus 12 months out. With the trifecta of (i) lower cost/higher volume production, (ii) Stanwell $150m boost from rebates ending and (iii) met coal recovery, this represents multiple times upside with much lower risk than it did a few days ago or a few months ago for that matter when the met coal price was lower than currently and the stock price was multiples higher. The exit of the previous shareholders which has created this disconnect in the share price has presented a temporarily mispriced opportunity. Not to mention corporate activity has to be a possibility here.
CRN Price at posting:
16.5¢ Sentiment: Hold Disclosure: Held
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