Next years’s contract question Hi Guys,
Can you tell me if how I am looking at this is correct?
In about 4 months time Corsa can negotiate a new annual contract. The futures strip for 2023 are currently about $330 per ton averaging all 12 months on the futures strip.
Ok, so if I ballpark that Corsa can lock in $250 for a new 12 month contract for all their own production just for arguements sake which is 800,000 tons.
if I take the $250 per ton and subtract $132 per ton in expenses I get $118 per ton in free cash flow. Call it $100 per ton multiplied by 800,000 tons gives me $80,000,000 USD in free cash flow for 2023.
and this can be locked in in about 4 1/2 months from today assuming futures do not decline between now and September/October. European coal sanctions on Russian coal begin August 1st so we should be fine on that front..
the market cap of Corsa today is about $25,000,000 and Corsa could throw off $80,000,000 in free cash flow next year. Huh?
is my way of looking at this correct? Light at the end of the tunnel?
i was shellshocked by the news but have not sold based on this way of looking at the company. Am I missing something?