Far East Capital Newsletter
Pacific American Coal Ltd
6 Nov 2016

In This Issue

Company Review

Pacific American Coal Ltd

The independent research written by Mike Harrowell, an experienced institutional mining analyst, has concluded that the minimum price for Pacific American Coal, when compared to the prices of other coking coal stocks, should be 32c - and that doesn't include any value for its graphene investment. It is obviously an outstanding buy at these levels.

PAK has 257Mt resource of hard coking coal. A 2Mtpa hard coking coal mine located at Elko with a cash operating cost of US$90/t and a pre-production cost of US$350M would have an NPV after tax of around US$181M or A$242M (Discount 10%, ungeared, coking coal price US$140/t), giving an idea of the potential upside if PAK can deliver a project that looks like this. At A$160/t coking coal price, the NPV of our indicative model increases A$242M to A$493M, highlighting the high level of price sensitivity. 

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