NHC sold Burton mine and Lenton project to BCB. (BCB announcements from 4 August 2021 and 21 December 2021) "Plant and infrastructure with replacement value of ~A$300m" and "A$20m upfront payment" were two quotes from the pack. NHC didn't take a look under the hood. They sold the hood for $20m including all of that infrastructure that had a replacement value of $300m (which BCB now says it worth $500m). Clearly NHC didn't think the infrastructure was worth anything remotely close to $300m at the time. No one in their right mind would sell $300m worth of goods for $20m - even if there were some milestone and royalty payments if things worked out.
Fast forward to day: "The New Hope facility totalled $50.5 million at 30 June 2024... The facility was set up to provide a bank guarantee for the Company’s share of bonding required for Burton/Lenton’s estimated rehabilitation cost (ERC) under the Queensland financial provisioning regime." (BCB announcement from 29 July 2024). So NHC is exposed - not in a good way, but it could be worse.
These days BCB has debt of $167.5m at 30 June 2024 (of which, $50.5m sits with NHC). Now why would NHC pay anything for BCB equity? If they're buying now, they're paying an enterprise value of around $200m for something they sold for just $20m. NHC have been known to do stupid things from time to time, but this would be beyond them.
NHC Price at posting:
$4.21 Sentiment: None Disclosure: Held
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