A few observations and a few conclusions (with assumptions as required):
1. "Advance from shareholders" - it appears somebody is providing just as much cash as the company needs to stay afloat to offset the debt payments.
2. $100,000 received for 83,500 tons of coal sold = average royalty of $1.20/t. This suggests just over 10,000 tons was sold at the $2.50 royalty and the remaining 73,500 at the $1 royalty. So we REALLY need the price of Indon domestic coal to push up even $3, then income will go up a lot. I doubt it will ever get to $45 anytime soon so $3 is a pipe dream.
3. Production currently just under 30kt per month. Pretty good, hopefully will get better.
If they can get to the 80kt per month and secure the $2.50 royalty they will have $600k a quarter coming in instead of the current $100k. If they can manage it this will actually be a fairly profitable little company even after accounting for its debt.
I guess the downside is that this is all in the hands of the contractor. If the contractor wants to sell for $34/t and pay $1 royalty instead of $35/t and pay $2.50, CES probably can't stop them. Just gotta hope the domestic coal price pushes up to $37ish.
But I agree with mrspec. Things could actually work out okay for these guys... and us by extension. :) I would also like to know what's happening with our HDI shares. Something shady with that whole deal.
AQJ Price at posting:
5.0¢ Sentiment: None Disclosure: Held
