FYI8 Feb 2012 12:31
Since looking at their propects in Janaury, wider economic woes have held the share price back, but the company’s work programme in South Africa has continued to progress impressively. The most exciting move came earlier in the year when they announced an off take agreement to export 2 million tonnes of their coal through the port of East London. Since then a substantial infrastructure programme has been deployed to develop railroad and port infrastructure, this was funded by a placing at 19 pence back in August which raised over 10 million pounds. The company has plans to develop the deep water port of Coega which is capable of handling the 180000 tonne vessels which make economies of export considerably more attractive.
The value of the contract to Strategic is $200 million. Exporting is due to commence in H1 2012 which will lead to decent revenue; they have indicated that from June, a minimum of 40,000 tonnes will be shipped, looking at the current wholesale price of their 5500 Kcal/kg coal, which is around $130 mt, this would indicate revenues of $5,200,000 per month, giving them revenues of $62m per annum. Their market cap is currently a measly £17 million pounds.
Strategic are one of many smaller companies who have been going about their business whilst Rome burns. Given their cash position, their programme of work and their industry leading management, the investment case is compelling.