BSP is correct, my hunch is Blackwater/ Daunia is something like 70/30 of HCC to PCI blend, whereas SMR is 70 % PCI . I believe the differential in overall $ per tonne for realised pricing based off that change in ratio would be somewhere around USD $ 50 - 60 USD per tonne which on present exchange rates wouldn't be far off $ 100 per tonne Aussie and from recollection the saleable tonnes from Blackwater / Daunia are expected at 12.40 MT ( not dissimiliar to SMR).
Note with Blackwater and Daunia estimated to produce on average 12.40 MT of saleable coal over next 4 years, this is very close to the 13-13.50 Mt we are on track to achieve, so essentially you could say the differential in valuation here is for all practical intents mainly due to the differential in realised coal prices achievable rather than any volume effects. The costing they advised too dont look overly different either from Stanmore's.
The $ 90 -$ 100 per tonne differential in revenue drops all way the bottom line ( no extra marginal costs required) except for the impact of the royalty, which now being based on step - up progressive levels based on realised prices in Qld ( thanks to the jackals that are the Qld govt using Coal to cover up for all their waste and mismanagement of money), the royalty rate probably also jumps from the 30 % band to the 40 % band, so 40 % ( the difference) of that extra incremental revenue is lost to the Qld govt.
Therefore my guess is net of the ludicrous Qld royalty Blackwater and Daunia in terms of realised price per tonne would net around $ 60 extra to WHC than what SMR achieves. $ 60 x 12.40 Mt tonne per annum (being the avg saleable coal estimate over next 4 years WHC/BHP are expecting) , is around $ 750 M AUD per annum extra cash earnings . For simplicity lets say coal companies trade at around 2.50 times EV / EPS ( it floats between 2-3 in my humble view) then your at about $ 1.65 BN AUD in valuation for that incremental annual revenue.
If you look at the Blackwater/Daunia deal and take $ 4.10 BN USD ( which includes the extra earn in payments as these most certainly will get paid) but discount it to circa $ 3.50 BN for all the delayed 3 year payment plan. Convert on current exchange rate (0.64 AUD/USD) and you come out around $ 5.50 BN AUD. Take the $ 1.65 BN valuation off that I calculate above for the value of the extra earnings from the higher price profile of the larger % of HCC coal and your back circa $3.90 BN.
Our market cap is circa $ 3.30 BN, so this does suggest to me there might be some upside to our valuation from here. However it's not hugely different, I wouldnt have to move those calcs by any great number and you could explain away that gap. For example that gap closes entirely if I move the estimate of differential in USD pricing from $ 60 to $ 80. So given all of the above I am inclined to think might be a small upward re-rate from this, but dont think it is going to cause any major re-rate.
For mine what market now wants to see for Stanmore is proper attention to a capital maagement framework and how it is going to return capital to shareholders. To date we have seen nothing reallyon this but now Stanmore is not the buyer for these BHP assets and given by my calculations it should be on track to make around $ 1.20 Bn in post tax earnings per year ( $1.30 per share) if met coal prices hang around $ 300 + levels for HCC ( and assuming they achieve around 60 % of that level for their PCI content) , market wants to understand how much of that can flow back to shareholders in form of dividend.
SMR Price at posting:
$3.72 Sentiment: Buy Disclosure: Held
(20min delay)