Bathurst Resources - BRL

[barleeni]

Less than 8 months. Job done.

Looking to double that again in the next 12 months.

Might only take 12 days after reading this evenings market release.

[blackcap]

I am a happy holder and not complaining one bit with what the company has done and what it is about to do. But from someone who is a little unsure of how this market works.... BRL at 11.5c are at a market cap of $113m. To justify that price you need at least a profit (ongoing) of $11.3m (PE 10). THe question I have is how are they going to achieve that? Genuinely interested and sure how BRL are going to do it. Not tempted to sell yet, already sold a few half a year or so ago at the 10 cent mark so holding onto the "free" ones for a bit longer.

[barleeni]

I am a happy holder and not complaining one bit with what the company has done and what it is about to do. But from someone who is a little unsure of how this market works.... BRL at 11.5c are at a market cap of $113m. To justify that price you need at least a profit (ongoing) of $11.3m (PE 10). THe question I have is how are they going to achieve that? Genuinely interested and sure how BRL are going to do it. Not tempted to sell yet, already sold a few half a year or so ago at the 10 cent mark so holding onto the "free" ones for a bit longer.

I dont have a very good grasp either..... but looking at todays release and plugging in the numbers for what I think the report indicates, this is what I get. Bear in mind this is ONLY for the newly acquired assets (for which BRL itself only has a 65% shareholding):

Rotowaro - 65% share - 700,000tons FY18 - margin $30/t = $13.65million margin to BRL
Maramarua - 65% share - 150,000tons FY18 - margin $25/t = $2.44million margin to BRL
Stockton - 65% share - 1,000,000tons FY18 - margin $30/t (?) = $19.5million margin to BRL

So $35.6million margin? But I actually suspect the margin for Stockton is higher than $30/t buts it not really disclosed.

Im not sure about there margin which they are advising, is that margin after overheads or margin after only production costs. Who knows. If that was net margin far out....

I must be doing something wrong!!!!! There are clauses though I beleive, if they make in excess of $50/ton margin on anything some kickbacks go to the original owners!?!?!

Thats my two cents. Someone please correct my calculations though!

[biker]

I dont have a very good grasp either..... but looking at todays release and plugging in the numbers for what I think the report indicates, this is what I get. Bear in mind this is ONLY for the newly acquired assets (for which BRL itself only has a 65% shareholding):

Rotowaro - 65% share - 700,000tons FY18 - margin $30/t = $13.65million margin to BRL
Maramarua - 65% share - 150,000tons FY18 - margin $25/t = $2.44million margin to BRL
Stockton - 65% share - 1,000,000tons FY18 - margin $30/t (?) = $19.5million margin to BRL

So $35.6million margin? But I actually suspect the margin for Stockton is higher than $30/t buts it not really disclosed.

Im not sure about there margin which they are advising, is that margin after overheads or margin after only production costs. Who knows. If that was net margin far out....

I must be doing something wrong!!!!! There are clauses though I beleive, if they make in excess of $50/ton margin on anything some kickbacks go to the original owners!?!?!

Thats my two cents. Someone please correct my calculations though!

The update says the Stockton margin is NZ$50/tonne based on US$135 Coking coal price and $0.70 NZ:USD - therefore BRL margin NZ$32.50 per ton yielding NZ$32.5 million on Stockton alone with a note that the hard coking coal price was US$178.50 two days ago. (So the figures are QUITE conservative).

The market will decide what BRL shares are worth but today's numbers with an indicative EPS (diluted) of circa 3c, would indicate something well north of 11c

[blackcap]

The update says the Stockton margin is NZ$50/tonne based on US$135 Coking coal price and $0.70 NZ:USD - therefore BRL margin NZ$32.50 per ton yielding NZ$32.5 million on Stockton alone with a note that the hard coking coal price was US$178.50 two days ago so the figures are QUITE conservative.

The market will decide what BRL shares are worth but today's numbers with an indicative EPS of around 3c, would indicate something well north of 11c

Cheers Biker... that makes sense. I do sense BRL are worth north of 11 cents. Just do keep in mind the convertible notes etc at the 2.2 and 3.75 cent mark that will offer some dilution in the shareholdings. Other that that if your figures above hold then we could be looking at 30-50 cents in the next year or two as production begins to come on board..... could be a more interesting AGM than 2 years ago that is for sure.

[RTFQ]

A Panamax departing with 40,000t of coal loaded FOB at NZ$100/ton and being sold at US$150/NZ$200 per ton is a $4m profit to BT mining. 1mt year equates to $100m profit from Stockton per year using conservative figures, ie $65m to BRL

[yabster]

as of the 1 sept there will be 1.9 billion shares on issue (if all converted- exercise at 2.2 or 3.75 cents)- up from 986 million- so possibly some profit taking then? In saying that re the above calculations at $50 mill gives an eps of 2.6 cents - at 80 million using RTFQ calcs for stockton (after it ramps up) eps of 4 cents- pe of 10-14 for miners give a range of 26 cents to 56 cents (market cap would be 1.1 billion at the high end)

Risks being nzd, commodity price and the court case.

I don't hold but am interested (dilution and possible sell down is my main concern)- would be interested in any comments on the figures assumptions above.

[biker]

as of the 1 sept there will be 1.9 billion shares on issue (if all converted- exercise at 2.2 or 3.75 cents)- up from 986 million- so possibly some profit taking then? In saying that re the above calculations at $50 mill gives an eps of 2.6 cents - at 80 million using RTFQ calcs for stockton (after it ramps up) eps of 4 cents- pe of 10-14 for miners give a range of 26 cents to 56 cents (market cap would be 1.1 billion at the high end)

Risks being nzd, commodity price and the court case.

I don't hold but am interested (dilution and possible sell down is my main concern)- would be interested in any comments on the figures assumptions above.

I think you have summed up how it roughly sits.
The market is yet to catch on.
Dilution and sell down doesn't change the fundamental value of the company - it just poses the possibility of a short term oversupply of shares on the market holding back the share price but with fundamentals as good as this and the possibility of future growth or greater longevity when Cascade comes on line why would you sell at these levels?

[barleeni]

as of the 1 sept there will be 1.9 billion shares on issue (if all converted- exercise at 2.2 or 3.75 cents)- up from 986 million- so possibly some profit taking then? In saying that re the above calculations at $50 mill gives an eps of 2.6 cents - at 80 million using RTFQ calcs for stockton (after it ramps up) eps of 4 cents- pe of 10-14 for miners give a range of 26 cents to 56 cents (market cap would be 1.1 billion at the high end)

Risks being nzd, commodity price and the court case.

I don't hold but am interested (dilution and possible sell down is my main concern)- would be interested in any comments on the figures assumptions above.

Thanks for the reminder. I remember being quite annoyed at the time at the T&C's however long ago that announcement was made. Does anyone know if the arrangement is binding? I was at the time disappointed that they didn't elect to approach existing shareholders with a more traditional capital raise. This surely would have been in the shareholders benefit, as dilution would surely have been substantially less. One wonders if their cash position at time of transaction occurring (some point in the near future) would negate the need for the existing arrangement (I assume the $46 million or whatever it is has not changed hands as yet?). Do they need to exercise all of the arrangement?

[biker]

I found this post on hotcopper- accessible to anyone. You don't have to be signed up to read these posts.
Thanks xmanrocks.
If all the RCPS are redeemed and not exercised, there will be 513,818,182 fewer shares than originally forecast, on the register - after full dilution, 1,370,663,943 shares on issue. It's not certain this will happen but it would seem to be a no-brainer for the sake of less than NZ$12million and may well have been the plan all along with projected earnings from 1 July 17 to cover the cost. If so, then board and management have my respect and the share price has a long way to go.


xmanrocks:
"The asset grab off the NZ government appears to be a steal.
So I have been somewhat surprised at the slow reaction of the market to what has just been achieved by BRL.
My thoughts have been is this due to the share options and the major dilution they will cause should they all be exercised.
This morning I enlisted the help of a retired broker, who is much smarter than me, to decipher the options that are listed, in particular the RCPS issued at 2.2 cps, and run through possible cash flow scenario's of the business given the current macro environment.

Here's what I learnt.
The RCPS that were issued at 2.2 cps are under the control of the company whether to be redeemed/exercised or not.
This must be done with in 12 months, so in this case 2nd February 2018.
When running through the possible cash flow of the company between now and then and considering other options(refinancing) it is fair to assume none of these RCPS options will need to be exercised. BLOODY HAPPY DAYS.

Yes I know the smart money is already days ahead on me.......but honestly after learning this I could not believe I am purchasing shares at 12.5 cps this afternoon.


Here is a snippet from the 2 November 2016 cap raise announcement.

Subject to obtaining shareholder approval, the RCPS will be convertible into fully paid ordinary shares in Bathurst at a fixed conversion ratio of A$1,000 divided by A$0.022 per RCPS. The Company may elect to convert all of the RCPS (or only some of them) at any time after the Sale Agreement is unconditional on or before the maturity date, being 12 months from the date of issue.

I was very very happy to add to my holdings today based on the clarification I have received.

On another note my broker tells me that you can be sure that those that took part in the convertible notes issue were already investors in BRL and if they were interested in selling down and taking profits they would be selling down their existing holdings now and just replace there holdings with conversion shares so he thinks the sell down after the solid energy settlement is somewhat of a myth.

I don't like been drawn into what the shares are really worth but given the assets and business model I believe they are extremely undervalued............"