Mulling27 Feb 2022 10:31
Some sunday morning mulling ... It's easy for us to underestimate the work and skill that is going in to bring BEN back into production and then increase up to the ambitious targets. This week's RNS was a reminder of the complexities of the wash plant and its a tribute to AW and his team that they have tackled all of that during challenging times and got the plant to a point where it can now be optimised. Ability to process 350 tons per hour will be awesome and game-changing for BEN.
I'm sure the same effort, care and attention is going into the work on the rail spur. Its the other remaining critical component in rapidly moving towards target production and sales and we should hear about progress on this very soon. With rail and wash plant in place, 1st high wall miner running (contracted to produce 40k tons per month, presumably when rest of infrastructure in place to support this), we also had the statement in this week's RNS that the 2nd high wall miner will be 'deployed ahead of the initial scheduled timetable of the second quarter of 2022'. To me that means before end March.
With all above in place, potentially running optimally from April, AW will be able to rapidly ramp up production - as he said this week, to exceed the initial volumes agreed with the offtake partner (22k tons per month). He has mentioned a figure of 70k tons per month more than once with 2 hwms operational, and this is looking increasingly feasible, possibly before the summer.
AW has also said he has an aim of BEN becoming a $1bn company. OK, working backwards, with 320m shares that's a sp of $3.13. At p/e of 8 (industry average is 12 so this is conservative) that implies profit of $125m pa. At profit of $150 / ton (which must be achievable with met coal price at all time high) that's 833k tons production per annum, or just under 70k tons per month. i.e. exactly what BEN is lined up to achieve in coming weeks / months.
That's a share price of £2.34, i.e. practically 4x current price. This genuinely looks achievable in coming months.
Plus, if profit is at above level then AW is potentially well placed to provide a dividend back to shareholders before year-end, possibly at the 10p per share level which some believe is his ambition.
This is all before any further expansions, acquisitions, royalty deals, more hwms etc etc.
Exciting times for all involved with BEN!
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