10 MTPA 5 export 5 domestic 30 USD profit per tonne export 5 USD profit per tonne domestic
150 million plus 15 million 175 million dollar profit, with a P/E in the range of about 15-20, which is very reasonable, we are looking at approximate 3 billion dollar market cap by 2015. With the market cap fully diluted, that gives approximate 10 times rise in share price. This isnt off pie in the sky approximations either. We have the infrastructure, we have the offtake, we have the rail allocation, we have the management, the resource is well proven and we have access to whatever capital we need (the CAPEX might be 'expensive and cause more dilution though)
I know for instance, of a mongolian coal company whos market cap has recently risen to CCC's, People say, well their resource is better quality, CCC have mainly domestic grade and some export grade with no coking coal.
The major difference is, we have ALL the ancillary items you NEED to PRODUCE coal. Anyone can drill a hole and announce a resource, the REAL work comes in the form of the CAPEX and the INFRASTRUCTURE. Unless you are an Xstrata/BHP who can build their own rail system, you NEED access to a well established coal export area. Richard Bay is WORLD RENOWNED, it is one of the most consistent, well established ports in the world, been around for a long time and shows no signs of slowing down, if anything its still getting expanding.
We ALREADY have our rail allocation We are ALREADY exporting and have an offtake deal for 20 years We are already selling our Domestic to eskom We are BEE complient with removes the majority of the pesky sovereign risk of Sth Africa, if anything, the push from the govt away from the Multi-nationals to BEE complient companies is obvious. They have let it be known that their policy is to give the extra Richard Bay rail allocation to BEE companies over the multi-nationals. It also means that if CCC hunt other 'mashalas' (small BEE private equity owned mines that are too small to fund Capex) there will most likely be no issue in terms of govt approval for M&A, because of our BEE compliance. We tick EVERY box for a producer, we have got our first mine online within ONE YEAR of acquisition, it is already SURPASSING ITS LONG TERM TARGET. We have already started EXPORTING COAL.
So management, of a 200 mill minnow have proven they can 1. Raise as much Capital as needed for CAPEX 2. Develop mines in record time and out perform estimations 3. Deliver Export Grade Coal to the Richard Bay port for export
While mining might be quite technical, it all boils down to these 3 points. Get money, develop the mine, sell the coal. CCC has already proven it can do all that is required. This company feels like a blue chip in the strength of the business, yet it trades at a sub 200 mill market cap. There will be companies that 'bag' more than this between now and 2015, but there is nothing that is as guaranteed as this to 'bag'.
Long winded post, apologies if the spelling/grammar isnt the best
CCC Price at posting:
73.0¢ Sentiment: Buy Disclosure: Held
