RE: Where Is The $ 16M In Capex GOING??? I still think this company is worth $500 million TO AN ACQUIRER, (not necessarily under the current mgmt team). $500 million is derived from an average of $100 million of EBITDA x 5 EV/EBITDA multiple. Even if one thinks that $100 million of EBITDA is aggressive, there's material value in the company's 388 million ton coal resource AND the possibility of a longwall operation. Give Cline just a 10% chance of a longwall by 2016, that equates to about
.26 cents per share, (according to Cormark's report that shows an un-risked $2.66 per share for a longwall.
What does one think about the probability of a longwall being installed if the likes of Peabody Energy buys CMK? I would argue a lot higher than 10%. The longwall option has real tangible value to an acquirer.....
Next, assume $75 million in debt, (up from the current $50 million) and fully diluted shares of 237 million. Assume zero cash even after the incremental $25 million debt drawdown. Therefore, $500 million minus $75 million of debt = $425 million. $425 million divided by 237 million FD shares = $1.80 stock price, a 3 bagger (3x) return from
.60 stock price.
At
.60 per share, the FUNDAMENTAL value of the Company's 388 million tons =
.50 cents per ton. That's before considering that the Company has recently locked up more DOW tons.
I know 6-9 months ago I said the stock was worth a lot more, but the coal market has changed very significantly.
My average cost after buying more today is $1.32, so I''m not thrilled with the possibility of $1.80, but it is what it is.