discounted cash flow, page-4

The $16 million corporate costs p.a. were based on the 1H21 report that showed $8 million in costs for the half. If anything, i believe these costs will come down due to further job losses in relation to Acland.

To put some numbers around it, based on 832 million shares on issue, an additional one-off $10 million cost = 1 cent per share in cash / value. An additional $10 million cost annualized, would represent about 7 cents per share (when discounted on the assumptions above - 10% discount rate).

In my view, the corporate costs are not an important swing factor for valuation. I believe the success (or otherwise) of NHC as an investment will be driven by four key things:
1. Future coal price - if you believe long term prices are going to be >US$100/tn then everything else is virtually irrelevant. NHC will be a great investment at the current share price. And if prices persist at current levels for 6-12 months the investment is very quickly de-risked. 12 months at current prices is worth circa $700 million in after tax cash = close to $0.9 in value per share. If that comes back to shareholders as fully franked dividends then the value is even more. And remember that is just one year.
2. Exchange rate - has a direct impact, just like coal prices above. you can see the impact in the NPV table above
4. Management use cash wisely - the above analysis is essentially based on Bengalla generating after tax cash and that cash being entirely distributed back to shareholders. Of course management could spend the money on an acquisition, and this will create uncertainty and could result in big swings in value. Being risk averse, i would probably prefer they simply return cash to shareholders. That makes an investment in NHC more predictable. However the reality is when investing in a company, you are also investing in the management team. Fortunately NHC have a strong record of investing money wisely and creating value rather than destroying it. This is one of the reasons i am attracted to NHC vs other coal miners.
3. Acland approval - i essentially consider this a free option. Assume the value is $0 - which appears to be the the market assumption based on current price, but there is an outside chance (although decreasing) that this does eventually get approved. The value per share would be $1+ which equates to circa 60% upside on the current price. Not a bad free option. And the $1 value could be a lot more