HairyRichard
With all due respect talking in SP terms makes no sense.
why 10c (or xyz for that matter) with PCI operational ? We dont know how many shares would be on issue at the time. Dom has indicated there might be a placement to lock in the offtaker (preferred for me) for the future growth of the company. How many shares would be issued then for these guys ? 30mil or 100mil or 200 mil ? The valuation completely changes on these scenarios at 10c.
You need to talk in terms of Market cap to get a better handle of the company prospects. IF you say with PCI operational Cokal should be valued at 100mil then that again is up for discussion
1. How much free cash flow and profit would cokal be keeping ? Is the deal going to be profit share (preferred) or discount pricing. Profit share decreases our risk with the coal price fluctuations but we also give away our profits. Discount pricing gives us a bigger share of profits but then exposes us to coking coal price crash threatening the business unviable. We need to see the deal to understand where cokal stands
2. How much upfront money would cokal be given in return of profit share arrangement and at what terms. For example if we are offered 15mil (my guess hoping for a higher deal) in return of 50% of PCI profits ( I know it looks terrible on paper but no one makes money if PCI never gets off ) then we need to account for cash in the bank (i.e. understand cokals EV) and what cokal intends to do with that money. Will they be increasing their resource by drilling Tbar and delienating potentially high quality coal at low strip ratio or developing infrastructure for BBM through road and port development. Market is always forward looking for so why shouldnt we have coking coal valuation thrown in the market cap too ???
Sorry for the rant but Ive been seen a lot of these SP related posts with complete disregard for the upside which would be coming in. Yes I understand the mangement has over promised and under delivered at times but starting a new mine anywhere in world is not child's play let alone in middle of nowhere. There is some credit deserved here.
My humble advice is do your math and read closely what comes out of these negotiations before you sell your shares at some arbitrary price point.
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