Cokal Limited Potential Rerate
Cokal Limited have recently announced a non binding LOI for the sale of 50,000 tonnes of high grade coal per month. The LOI is expected to move over the next few days into a binding agreement which should see the company achieve a valuation based on the project economics
The project basics
Non binding LOI for A400m of coal sales at 50k t/month
US1126/T assumed price therefore A1164/T (discount to be negotiated for pre payment)
50,000t = A8.2m/month implied revenue A
98M p.a
Margin expected to be around A440/T, $24 m/year or 3.7cps
The companies cash reserves are low however the terms in the LOI are designed with a prepayment of approx
25M to cover the costs involved in mining. Assuming that the deal progresses to binding then the market should begin to value the company based on future revenue.
Initial target is 15c which will rely on a binding agreement to be achieved
The project basics
Non binding LOI for A400m of coal sales at 50k t/month
US1126/T assumed price therefore A1164/T (discount to be negotiated for pre payment)
50,000t = A8.2m/month implied revenue A
98M p.aMargin expected to be around A440/T, $24 m/year or 3.7cps
The companies cash reserves are low however the terms in the LOI are designed with a prepayment of approx
25M to cover the costs involved in mining. Assuming that the deal progresses to binding then the market should begin to value the company based on future revenue. Initial target is 15c which will rely on a binding agreement to be achieved
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