sum of the parts, page-3

Thanks for the reply D&C and for the justified opinion.

However one thing you have got wrong is the Adani Royalty. It's not a matter of opinion here, just simple financial mathematics. A deposit of $200 m at 10% will yield only $20 million per annum. And you're not comparing apples with apples by compounding in your term deposit example because nobody assumes LNC will compound their royalty stream into an interest bearing investment (they'll probably be spending it on business costs or debt reduction).

Here is the CPI adjusted calculation based on a conservative forecast for coal production beginning at 25 t in 2016, increasing 5 t per annum to 60 t per annum from 2023 onwards, with the $2 per tonne benchmarked at the first year of production (or perhaps it was benchmarked when the deal was signed?) and adjusted for CPI at 2.5% thereafter.

Production yr Tonnes $/t Royalty
2013 - -
2014 - -
2015 - -
1 2016 25,000,000 2.00 50,000,000
2 2017 30,000,000 2.03 61,048,782
3 2018 35,000,000 2.07 72,499,946
4 2019 40,000,000 2.11 84,379,388
5 2020 45,000,000 2.15 96,714,881
6 2021 50,000,000 2.19 109,536,236
7 2022 55,000,000 2.23 122,875,471
8 2023 60,000,000 2.28 136,766,999
9 2024 60,000,000 2.33 139,613,389
10 2025 60,000,000 2.38 142,592,428
11 2026 60,000,000 2.43 145,711,925
12 2027 60,000,000 2.48 148,980,247
13 2028 60,000,000 2.54 152,406,373
14 2029 60,000,000 2.60 155,999,937
15 2030 60,000,000 2.66 159,771,294
16 2031 60,000,000 2.73 163,731,576
17 2032 60,000,000 2.80 167,892,761
18 2033 60,000,000 2.87 172,267,753
19 2034 60,000,000 2.95 176,870,461
20 2035 60,000,000 3.03 181,715,891

The NPV today of this cashflow @ 15% discount rate is $486.2 million and the NPV @ 10% discount rate is $784.1.million.

I can't imagine why anybody would apply a higher discount rate than 15% on this income stream (Adani are a very large contractual counterparty therefore the risk can't be deemed that high here) so worst case it that the Adani royalty is worth about $500 million today. This alone represents about 60%+ of LNC's market cap.