Apologies for not posting sooner but have been incommunicado for the last month. As such I will give my two cents worth as to the PFS results, technical studies and the months ahead.
Well the $2.00 price target has been hit and passed which is a fantastic result for all holders but as you can imagine I still believe CPL still has significant upside from here.
PFS
While not meeting my bold call of up to 12 mill tonnes pa I am happy to take 9 mill pa with EBITDA over 31 years being between $361 and $375 mill. This is likely to be increased with the inclusion of the North Limb of Vista South which may add up to another 4 mill tonnes pa after Vista is up and running. Either way the economics are outstanding given the predicted future price of export thermal coal. Interesting that Gene states in the PFS release that they will continue to refine the PFS in the lead up to the commencement of the BFS which could possibly mean that there could be some improvement to the PFS economics to come. Also we now have Reserves as a result of the PFS which are substantial and amongst the highest of all coal companies, producers and developers, on the ASX.
Technical Report
A long read but well worth it. Both projects are rated as significant coal resources with significant upside remaining at Vista South. Interesting that the Phase 2 drilling at Vista South is designed to primarily test the area of significant drilling by Denison in the 70's and 80's which is located approx half way along the northern limb. They comment that this area is evidenced by "fault repeating and over-thickening so there is excellent potential for significant resources in this area". I am not sure whether this phase two drilling has commenced or in fact finished as several announcements have it starting in November. Anyhow this will add further resources which I expect will see CPL sitting at somewhere near 1.6 and 1.7 bill tonnes in the next few months.
The Next 4 Months
OK now time to stick my neck on the line again with my next price target - $3.20 by end of March.
The price catalysts will be the release of research out of Canada which, from what I can see has not occurred as yet and the investor and broker road shows Gene mentioned in CPL's September Quarterly Report. I anticipate an Investor Presentation to be released in the coming weeks as CPL start to tell the North American investor community about the largest export thermal coal project in North America at the same time the price of thermal coal is continuing to rocket - the perfect storm so to speak.
In addition, the Jan - Apr period in Northern hemisphere markets is one dominated by investor and industry conferences. According to the BMO Capital Markets website CPL is due to present at their Global Metals and Mining conference in Florida in late Feb. This is a who's who of the mining industry and this year they have a dedicated "Coal Stream" where CPL will present alongside the likes of Alpha and Teck. Other conferences include PDAC in Toronto in early March and the Coaltrans USA conference in early Feb - either of which CPL could attend.
Also, we know that CPL is a client of RK Equity Advisors based out of New York who specialise in road show coordination in the US using their significant industry contacts. I therefore believe not only will CPL present to brokers and investors in Canada but North USA will also be on their agenda.
As I signoff CPL is currently trading at $2.19 in Canada. Bring on $3.20.
Regards
Danash
CPL Price at posting:
$2.11 Sentiment: LT Buy Disclosure: Held
(20min delay)