News: SMR Stanmore Resources Conducts Equity Raising To Fund Acquisition Of BHP's 80% Stake In BHP..., page-43

If the price of metallurgical coal , in particular PCI Grade as smr mainly produce can stay circa 200 per tonne , over the next couple of years and that’s not unreasonable if you look at the spot and futures markets at the moment for metallurgical coal both pci grade and soft coming coal, out 2 to 3 years to give smr opportunity to pay the debt component down of their purchase funding , then this company could indeed be worth every bit of that 3 Bn once they have derisked .

Longer term if we revert to a price around 130 usd per ton for metallurgical coal , which in a world post ukraine should be easily achieved and even go back and look at last 10 year average , and again that’s not unreasonable assumption , your clearing around 50 / ton usd . I expect Aussie dollar to go back to 0.80 cents in coming years as commodities are going to be in demand , then your still around 60 bucks per ton aud margin on what should be around 12 MT of annual output . That should be around 700 M ebitda .

If they can use this next couple of year period to get debt down to near zero , then on that level of earnings and applying a P/E ratio around 4 which is low but this is norm for these much hated coal companies today , thanks to green lunatics , your around 3Bn valuation . Every one of those variables I just stepped through are cautious and far from over the top and I easily get to their ballpark figure . In fact doing such sums myself and getting to around that level is why I recently took a position via the rights sell off where I could get in around the 1.40 mark .

Dyor but for mine easy 2-3 X here could be made from these levels . My main risk is the timing of the handover from bhp / Mitsui , sooner the better while coal remains at elevated prices . Company needs to clear up exact time frame to market on handover , which at moment is being called mid year , but that is to vague for mine when a contract is now unconditional .