Share this page!

Cycle Bottom Profile picture
Twitter logo
Jul 7 • 5 tweets • 2 min read
#coal: could coking spot move below thermal given a recessionary slow down in steel production, yet power generation deficit due to Russian sanctions? Creating elevated #metcoal prices for longer? Providing a boost to 2023 margins for the new undervalued start ups...
$CKA $AHQ
The 2023 economics:

1m/t production @ US$100-150 cash margin = A$140-200m CF

1.5m/t @ US$100-150 = A$200-300m CF

Valuation multiples of 1-1.5x cashflow, assuming material stock buy backs = re-rate to 2.5-3.5x is very possible.

$CKA $AHQ
Self funding #coal takeover bids? As cashflow run rates imply less than 2x cashflow valuations, or 50% cashflow yields, wouldn't it be attractive to announce a bid at say 25-30% yield? $CKA has had at least 2 bids in the past, insiders own around 50%, don't be surprised in a 3rd.
$CKA Mgmt take note:

Free cashflow and deployment in 2023 to maximize cap value:

1Q $20m, $5m buy back = +50% cap lift
2Q $30m, $10m BB = +50% cap lift +$5m Dividend +$5m TBAR acceleration
3Q $40m, $10m BB = +20% cap lift +$10m Divi
4Q $30m, $10m BB = stable cap +$10m Divi
To achieve these CF estimates in 2023, pricing of US$200-220/t would be required on 1m/t of production. Newcastle coking $260/t currently?

In 2024 2m/t on US$155-165/t pricing would achieve similar cashflow.

With Tbar in 2025, boosting production to 5m/t through 2026.

$CKA

• • •

Missing some Tweet in this thread? You can try to force a refresh
　

Keep Current with Cycle Bottom

Cycle Bottom Profile picture

Stay in touch and get notified when new unrolls are available from this author!

Read all threads

This Thread may be Removed Anytime!

PDF

Twitter may remove this content at anytime! Save it as PDF for later use!

Try unrolling a thread yourself!

how to unroll video
  1. Follow @ThreadReaderApp to mention us!

  2. From a Twitter thread mention us with a keyword "unroll"
@threadreaderapp unroll

Practice here first or read more on our help page!

More from @BULLReturns

Cycle Bottom Profile picture
Jul 6
We commenced nibbling yesterday in a sector down 90-95% that could see it's 2025 pricing be 100% higher than 2021 equating to 20x returns and higher.

DYOR, it a great time to make the right decisions for 2023-2025 stellar returns.
The new theme we have been deploying to is Bitcoin miners....

5x volumes @ 5x price coupled with rerating = > 20x returns
New fresh Asymmetric trade: 20x returns Vs 35% downside over the next 36-48 months

#bitcoin miners
Read 6 tweets
Cycle Bottom Profile picture
Jul 5
The life cycle of a resource nano resource cap through production & cashflow...95% fail over one cycle, 85% over 2 cycles.

We are seeing 3 through to completion currently, exposure in #metcoal, #expandablegraphite and #uranium

The initial resource stage....

1/
...coupled with cycle lows presented caps of less than <$10m as entry points.

The project PFS and DFS stages coupled with an upward cycle produced caps of $70-150m, 4-6x on a diluted basis.

Then all are moving to production and cashflow over the next 3 to 24 months....

2/
...with likely caps of $300-800m and diluted returns of 7-30x through 2024/25.

The average holding time will likely be 8-9 years for 14x return.

$CKA $WKT $AEE

Playing the long game over a project life cycle (and 1 or 2 up cycles) with low quartile AISC and capex.

3/3
Read 4 tweets
Cycle Bottom Profile picture
Jun 10
Indications on market bottoming, we will be keeping our dry powder particularly dry until the forward returns are exceptional.... 8x plus over 36 months.
Work backwards, what entry price is required for a respective position to provide 8x over the next 36 months?

50% lower than today or more?
Traditional cycle low valuations and indications...

Sub 3x PE from over 20x

Sub 0.2x Price to Book from over 2x

15-20 year stockprice lows

Dividend yields 14% plus from less than 1.5%

Exclude cyclical low PEs on high Commodity prices.
Read 4 tweets
Cycle Bottom Profile picture
Jun 1
What's the benefit of low AISC mining plays Vs High?

A) profitable over the cycle
B) mint cashflow near historic peak spot prices
C) high IRRs near peak prices
D) ability utilize high cashflow for debt termination, stock buy backs and dividends
E) cycle bottom to peak often >10x
Benefits of scaling production Vs peak?

A) doubling volumes with halving margins = steady cashflow

B) increasing economies of scale due to fixed costs spread over increasing volume

C) low AISC coupled with scalability at low capex is Cashflow minting in 4th quartile pricing
We are asked often would we sell certain positions given declining spot prices Vs our target fair value prices.

The answer is a combination of is it trading on less than 1x implied annual cashflow (based on 2023 cashflows), will 2025 volumes more than double, 2027 triple?
Read 6 tweets
Cycle Bottom Profile picture
May 18
$AEE gearing up the expertise for fast tracking production. At $75 pricing, Tiris peak annual cashflow exceeds A$150m, in ground resource will produce $3.5bn in cashflow, revised NPV on full resource exceeds A$700m. #uranium Skate to where the puck is going, not where it has been
Those who continue to skate to where the puck has been will miss the real story as it unfolds:

A) resource and reserve upgrade
B) "full" NPV over A$700m
C) fast track expertise additions
D) financing avenue crystalization
E) larger production capacity 3-5mlbs

#uranium $AEE
Our focus continues to be enjoying this cap growing from lows of A$6m to A$1bn over the #uranium cycle. Implementing positive change and direction has and will be key to achieving this result. The road to production for this low cost and capex player is pretty much assured.
Read 5 tweets
Cycle Bottom Profile picture
May 6
Medium term investors buying the dip should act with serious caution, bear market dipping becomes a serious capital loss exercise. Understand the wider liquidity flow issues at play, avoid becoming the victim. Most inexperienced investors will struggle with the losses.

#uranium
Decoupling from contagion takes time, the period of time will be shorter assuming the #uranium spot moves above $65 while equities price in $45 or longer if the spot contages lower as well.

50-70% down from recent 7 month highs continues to be a compelling accummulation zone
Fools buy the 15 dips in a bear market and self destruct 80% of their capital.
Those of us who built up 25-45% dry powder over the last 9 months have the resources to deploy into the next cycle bottoms that will multiply our capital by 10x plus.
#uranium
#commodities
#cyclicals
Read 6 tweets

Did Thread Reader help you today?

Support us! We are indie developers!

This site is made by just two indie developers on a laptop doing marketing, support and development! Read more about the story.

Become a Premium Member ($3/month or $30/year) and get exclusive features!

Become Premium

Don't want to be a Premium member but still want to support us?

Make a small donation by buying us coffee ($5) or help with server cost ($10)

Donate via Paypal

Or Donate anonymously using crypto!

Ethereum

0xfe58350B80634f60Fa6Dc149a72b4DFbc17D341E copy

Bitcoin

3ATGMxNzCUFzxpMCHL5sWSt4DVtS8UqXpi copy

Thank you for your support!

Follow Us on Twitter!

:(