Based on the announcement today I've redone some of my earlier calcs to take in to account the reality of where conti are today. I've come up with the following:
Current Production MPUMALANGA : PENUMBRA MINE, OPENCAST - 500,000 t/a export + 180,000 t/a domestic Vlakvarfortein - 600,000 t/a domestic
domum's formula Plugged into my slightly amended version of domum's valuation we get:
Assumptions: $12/T margin on domestic, $30/T margin on export
Domestic 780,000 MT X US$12/T = US $9.3M Export 500,000MT X $30/T = US $15M
Total profit margin $24.3M APPROX.
Tax 29% brings us back to US$17.3M APPROX.
P/E of 10 given the balance between export Vs domestic production in 2010 and converting for $US/Aus at 90c US we get $19M profit
Apply this to 2.7B FULLY DILUTED is around 0.007c/share.I'll discount by about 15% to about 0.006c.Multiply by P/E of 10 and we get an sp of about 6c or a market cap of $162M.
plus inground resource of 631MT equates to a market cap of $793M or 29c per share.
Note: I've also plugged the figures into the d&d spreadsheet as a cross check and came up with a similar figure.
A few peer comparisons To bring this figure back to reality it's probably worth looking at some actual market valuations also. There are others I could and probably will do over the coming days/weeks but here are a few to start with.
Note: please check these figures for yourself as I cannot guarantee their accuracy:
Company : Continental Coal (CCC) Fully Diluted Shares (approx) : 2700000000 Share Price: 0.07 Market Cap: 189,000,000 Current Production: 1.28 mta Reserves: 631Mt
Company : Macarthur Coal (MCC) Fully Diluted Shares (approx) : 254,333,109 Share Price: 13 Market Cap: 3,306,330,417 Current Production: 5.26 mta Reserves: 1,815.2Mt
Company : Whitehaven (WHC) Fully Diluted Shares (approx) : 493,650,070 Share Price: 5.42 Market Cap: 2,675,583,379 Current Production: 3.7 mta Reserves: 1,190.3Mt
In the short term I think a comparison with COK (which is also seen as undervalued) is more than appropriate given that conti's production is greater but their reserves slightly lower.
I think in the medium / long term (3-5 years) Botswana could be the Elephant in the closet as it could add an extra 1billion + to conti's reserves. This is when we can start to look towards the lofty heights of some of the others.
Hope this is of use. Please as always do your own research and feel free to correct me on any inaccuracies in my calculations or assumptions.
CCC Price at posting:
72.0¢ Sentiment: LT Buy Disclosure: Held
