Yes they’re not really paying for resources..at top of market because the owner will instead retain an FOB royalty entitlement and therefore take the ups & downs of future price swings…. as does AHQ.
AHQ then also takes on the environmental bond and associated liabilities and pays a small cash amount which is probably just the tangible asset values for land and existing plant & equipment. AHQ in effect just acquires control of the asset and hence the decision making ability re quantities and timing to best optimise for AHQ’s overall interest.
Personally however I’d also just like to see them focussed on delivering to maximum effect from New Elk, and BW and making hay while the “coking coal price sun is shining”…. BUT … as deals go, the downside risk here seems reasonably managed to limit AHQ exposure. The drawback now is dilution of New Elk value before it’s really brought to fruition … and without laying out a compelling case as to how the new acquisition is rapidly value accepting to existing shareholders. Presumably it is …if one supports AHQ management, but it would be nice to have it quantified and spelled out .
AHQ Price at posting:
58.0¢ Sentiment: Buy Disclosure: Held
