Originally Posted by
BlackPeter
Well, this is not good. If I put your numbers into my spreadsheet (i.e. NZ$115 production cost, NZ$40 transport to Lyttelton and NZD 140 coal price FOB Lyttleton, than the NPV of a share would be 22 cents negative.
This is obviously only true, if we assume that the coking coal price stays that low for the next 20 years (which is in my view unlikely, but your guess might be as good as mine).
"breakeven" (i.e. no loss / no gain) would be at an average coking coal price FOB at NZD 155 (USD 116)
the current SP value would be justified at an average coal price of NZD 158 (USD 118)
and to achieve my earlier quoted NPV of 22 cents per share we would need an average coking coal price of NZD 170 (USD 127)
If we take your quoted USD 140 (NZD 187) FOB form Lyttleton, than the share would be worth 47 cents.
So - I guess, whatever assumptions we make ... I think it shows that the share can be high gain (if coal prices lift long term by just a bit). However, if we assume that the current price will stay forever (or keep dropping), than obviously the share is worth little to nothing.
Take your pick.