News! Benjamin Hill Mining to acquire an additional 20% interest in the La Estrella Coal Mine. Now owns 40% of the mine.
La Estrella has 12mt of mixed Thermal/Metallurgical Coal with grades averaging near 1300 BTU's.
This is nearly 30% premium to the average coal mining grade in Colombia.
SRK Technical report recently commissioned. The last was done in 2012 and requires serious updates.
Currently Permitted for 180kt per year production. But management plans to apply for an expansion of this permit in 2024.
The average cost to mine coal in Colombia is $70/t.
Management has no disclosed if the current ownership is the max planned. I find it odd they have tranched in the first two 20% blocks. Could more equity be coming?
If the company can increase production capacity to say 400,000 tons per year. While increasing ownership to 100%. This would be $40m USD/yr gross income. At $30/t profit that would be $12M USD/yr profit.
One wild card however. I read the old report. Seems like 50/50 of the resource is Thermal/Met coal.
That means they probably won't get $100/t thermal price. They will likely get a blend or price premium because of the metallurgical content. $130-$150/t average wouldn't shock me. Meaning $60-$80/t profit.
That would be $24m - $32m USD profit in 2025-2026 or $32-$43m CAD profit. At a 4x multiple that's $128m - $172m market cap.
Current market cap - $38m (+250% - +350% return)
Now imagine if we get a run on coal prices. Every dollar up from here is pure profit. With renewables failing and power demand growing rapidly. Coal isn't going anywhere fast. Especially met coal given the war demands.
There is a reason this stocks chart is on fire. I'm not the only one doing the napkin math to know how profitable a future here could become!