Stanmore Coal (SMR) produced a stellar December Q with ROM coal production of 799kt and total sales of 573kt, up 60% and 80% respectively. This result comes after a successful transition from Isaac Plains (IP) to Isaac Plains East (IPE) mining area. ROM coal production was at a 3.2Mtpa annualised run rate versus the nameplate throughput for the Coal Handling and Wash Plant (CHPP) of 3.5Mtpa. Cash decreased from $19.3m at the end of September to $9.6m. This follows a heavy build in working capital, which has since unwound leaving a current cash balance of ~$31.2m (no debt). Golden Investments issued a third and final takeover offer, which is now unconditional, with an unchanged all-cash price of $0.95/sh. Given the independent expert’s valuation of $1.48-1.90/sh, we do not believe the bid will be successful. BUY recommendation with a revised $1.75 target price.
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