Hi. No disingenuity here at all. I have tracked it all in detail each quarterly because, as I said above, if they do make it from here then $250M market cap would be an excellent value play. But will they make it? That's where I'm unclear, but definitely more bearish than others here. The debt part is fairly easy. The opaque part is the sales and costs. Here’s my take, open for critique from all posters:
Debt
I have previously estimated this at around A$18M due per quarter. Firstly, they have the US$11M from Taurus due again each quarter. If we use say 0.66 AUDUSD, that’s A$16.6M. Then there’s other debt they’re servicing. Over the past two quarters when the Taurus repayments were deferred, they still paid A$1.57M (March Q) and A$2.09M (June Q) in costs of finance. So taking the low side to be conservative, A$16.6M + A$1.57M = A$18.1M per quarter in debt payments, possibly more (hopefully less if they can get more deferrals, but this just kicks the can down the road).
Sales
Obviously important to focus on coal sales, not production, when it comes to cashflows. The June quarter saw impressive production volumes Q-on-Q of +84.9% but actual coal sales were only +5.3%. They are clear on the reasons for this: logistics problems. The quarterly flagged “Issues with infrastructure service providers in Queensland” and said “This is likely to continue for the coming quarter”. They also say “the cancellation rate of trains remained an on-going concern”. However the good news is that the August update said “External coal supply chain issues have eased” and they are confident in “an increase in coal tonnes for the quarter”. More good news, but hard to quantify. Yes, they are now aiming to ship 4x vessels per month; they did 179kt in July but this was actually 10% lower than June which was 199Kt. The second issue is trying to estimate the split between thermal/met, and then within met, the split between PCI/coking. For a while now various posters have been repeatedly referring to the coking coal price, and then got caught out by the last quarterly where it became apparent they had not factored in (or the company had not been clear enough) on either a) the high percentage of thermal sold, or b) the fact that the met coal that is sold is PCI, not hard coking. This probably explained why some posters were coming up with calculations where BCB would be spitting out cash based on volumes, yet the reality painted by the company announcements is very different. In met terms the company is largely producing PCI and in their own words “customer demand softened considerably for PCI”. However they do say “shipments of coking coal from BME have commenced” and they flag “higher coking coal split once Ellensfield South is in production”. This has just commenced; the recent update said that first coal from Ellensfield South had been mined, but remember that’s first coal, not steady state. However there definitely should be some coking coal sold in the current quarter as the Product Coal Stockpile table shows 42.5% of the 231k in stockpile is coking. Good news. They need to sell this stuff. But it’s still uncertain what sort of coking price value they actually capture – it all depends on product quality and that is the unknown. One can’t just read the coking price on BarChart and assume they capture 100% of this.
Costs
As noted, I am sure Bluff will be shut down and after the last announcement I think most people would agree. This comes at a cost though – potentially breaching supply agreements, paying workers out to leave, C&M costs, etc. The cost of this is unknown but it will be a one-off hit. Otherwise, production costs have been very high to date and I can’t see this moderating quickly. Why? The Full Year statutory accounts released yesterday (which curiously I am the only poster to have commented on) show the issue. Yes, they have A$36.5M due to be paid to them over the short term (<12mos, probably this very quarter) of “trade and other receivables”. But conversely, they have A$120.6M of “trade and other payables” they are due to pay to others in the short term (<12mos, possibly sooner – we don’t know). That’s a big number… it’s almost as much as they have owing in debt over the same period. Despite your comments about me regurgitating old information, this is new (and very important) information as of yesterday. Now we can understand why the recent debt/liquidity update included this line: “The Company is also working with the mining contractor, BUMA, to identify opportunities to reduce the cost base further with equipment selection and services provided under the contract”. I imagine a big chunk of the payables due is to BUMA, given they are the ones mining the stuff. It will also be to other parties for items purchased for ramp up etc. But A$120M is a lot considering they are not cashflow positive and are likely about to shut one of their three mines, with only BME running at steady state and Ellensfield South only producing first coal in late August. I can now absolutely see why they need to extend the maturity date of their debt, because they need any money generated from operations to pay down the A$120M trade and other payables.
So... with all of the above in mind, I think you will be able to see why I have flagged the debt as the key concern for the company, as far back as last November when I stepped to the safety of the sideline. The company is highly leveraged, it’s probably the main issue facing them – although reading the financials yesterday, for me the trade and payables is probably getting right up there was well. Debt financiers might delay maturity dates, but I imagine contractors will be demanding payment. Happy to hear other’s views on this.
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