RE: Turn around..L2Everyone's complaining about mgmt, who cares? In the right hands, this is a valuable and strategic asset. Companies are more likely, not less, to be taken out when management credibility is low. Anyone who thinks that U.S. coal producers like Arch, Peabody, Alpha aren't watching this company is crazy. Even Cloud Peak could buy Cline. Heck, PCX, CLF, CNX, WLT, Grande Cache, almost anyone could buy it.
388mm tons of resources, hi-vol "B" quality (yes, I know some people doubt this, but why doubt the 43-101 tech report? Why doubt Wood Mckenzie who did a marketing study on the coal? The EV of this company with zero debt, 217mm fully diluted shares and $80mm cash is 1/3 that of Grande Cache's. Yes I know that Cline's cash balance will shrink by year-end, but it will remain above $25mm in my opinion, and that doesn't include the possible sale of non-core assets.
Will the company reach a run-rate production rate of 3mm tons by 3/31/12? My guess is no way in hell. Will they reach that level by 9/30/12? I think they can, but even if the best they can do is 2.4mm tons, then the stock is still very cheap. Bottom line, there are many cheap coal stocks at the moment, this one stands out simply because the company will be acquired within 6-12 months. The upside potential of the mine is too great for peers to ignore. At a purchase price of less than $700mm (~ CAD$ 3.5 per share) net of cash and giving some credit for the non-core assets, it's a no-brainer.