News: BCB Bowen Coking Coal Says Company Strategic Review And Update, page-2

Shaw’s have released an update report on BCB today, factoring in the company’s announcement of 28 August on the outcomes of its strategic review. On its latest base case forecast Shaw’s consider that BCB should be operating cash flow positive this quarter, and will generate sufficient cash flow to meet its debt repayment obligations. It acknowledges, however, that there are some downside risks which mean that this outcome is by no means a certainty.

After capex and debt repayments, Shaw’s estimate that BCB’s cash balance will reduce by about $30m in the current quarter but begin to generate free cash flow from the March quarter 2024. Shaw’s retains a BUY recommendation on BCB, despite the risks, but reduces its 12-month price target from 49c to 32c.

Shaw’s note that the Bluff mine is of marginal value, given its very high cost structure, and is likely to be shut down unless coking coal prices move sharply higher.