....Have you ever seen a one trick pony in the field so happy and free? If you've ever seen a one trick pony then you've seen me? If you've ever seen a one-legged dog then you've seen me... (Bruce Springsteen).
Do not be fooled by the impressive EBITDA generated over the last two years at Blair Athol. Easy to achieve those when you mine your highest margin coal in a peak coal price (+US$95/t) and favourable exchange rate environment. Thermal coal prices have dropped back to more sustainable levels (US$70/t) and Terracom will not replicate the EBITDA numbers achieved going forward. More importantly, based on my analysis of available technical information for Blair Athol, open cut production of 2-2.5Mtpa over a 15-year life of mine is a pipe dream. The 4 seam's quality deteriorates and depth increases towards the north and west of the current open cut making most of the additional reserves announced by Terracom in 2019 marginal to sub-economic. Feasibility studies by previous owners concluded that only 10Mt of the reserve can be mined profitably by open cut with the balance of the “Terracom reserve” requiring underground extraction.
BA has at most another 3-4 years of moderate-margin production left before hitting a brick wall. Terracom will not be able to repay its massive mountain of debt and will drag UNV's mines down with them. Not even Wal King will be able to stop the inevitable.
Terracom paper is going to be worthless in a couple of years and those that consider accepting the offer must know that the 10c cash being offered will be the only return they will make on their investment in UNV. DYOR!!!!
