TER - Terracom Limited

[Miner]

TER got a steroid injection to add 1- 2 years life
https://www.asx.com.au/asxpdf/20190320/pdf/443mlh353s84jx.pdf
Market did not mind however.
Disclosure - a holder

 

[Tumbarumba]

My tip in March 2020 comp. Profits from coal operations exceptional increasing cash balance to $67m . Market Cap. Is only $115m so Rerate is likely imo.

 

[Dona Ferentes]

found this article by a journo/ publicist, James Dunn

An innovative, high-yielding Australian Securities Exchange (ASX)-listed note will be at the centrepiece of a capital raising and debt refinancing being conducted by aspiring diversified miner, TerraCom Limited, the combination of which will fund an expansion into a bauxite project in the West African nation of Guinea.
TerraCom plans a low-cost operation in Guinea that could export up to 5 million metric tonnes of bauxite a year, from a total mineral resource of 73 million tonnes. The company estimates a 13-month development program could take it from “boots on the ground” to first ore shipment.

The vehicle for the Guinea project is Anglo-African Minerals plc: in February, TerraCom struck a binding term sheet to acquire AAM and its three bauxite projects in Guinea, partnering with the private office of Sheikh Ahmed Bin Dalmook Al Maktoum (a member of Dubai’s ruling family) to do so. TerraCom paid a $US500,000 refundable deposit for an exclusivity period until 31 August 2020 – this was subsequently extended to 31 October.
TerraCom is focused on bringing the smallest of the three bauxite plays owned by AAM, the Forward African Resources (FAR) project, to market, targeting 70 million tonnes of export quality bauxite resources. The company expects an initial production rate of 3 million tonnes per annum (mtpa), between 13 and 16 months from the start of development work, increasing to 5 mtpa over the following 12 months...

The plan requires a refinancing of TerraCom’s debt profile, which at present encompasses US$163.6 million ($233.7 million) in debt, or net debt of US$122 million ($174.3 million) if its cash at-bank is excluded.

A central plank of the refinancing is to raise $220 million through the issue of 220 million ASX-listed Notes at $1 each, paying a floating rate calculated quarterly on the first day of each quarter at the 90-day bank bill swap rate (BBSW) plus margin of 800 basis-points (8%) a year. But in an Australian capital markets first, the Notes will carry American-style equity options (that is, exercisable into TER shares at any time), on the basis of three attaching options over an unissued share in TerraCom for every four Notes issued. The options will be fully transferable and quoted on ASX. If all options are exercised, this would increase TerraCom’s cash at bank by $41.25 million.

You’ve got listed bonds and you’ve got listed options, effectively creating a ‘buy-write’ strategy for the buyer of the Notes, only that your upside increases exponentially upon success, as opposed to being ‘called away’,” says Christian Baylis, the lead advisor and arranger of the issue.

“The reason we structured it like that is because the upside in the equity will be as a result of the refinancing taking place. The capital raising – that is, the issue of the Notes – will be a catalyst for equity upside in TER shares, and we thought the buyers of the Notes deserve to participate in that equity upside. You can have the cake and eat it, so to speak” says Baylis.

TerraCom debt provider, investment management firm OCP Asia – which holds a $25.4 million convertible note – is the cornerstone investor for the Notes, subscribing for $80 million. Gleneagle is pitching the rest at both institutional and retail investors, firmly in the high-yielding securities market – which brings into play investors such as self-managed superannuation (SMSF) funds.

“At 800 basis points over BBSW, call it a coupon of 8%–8.5% over the three-year life of the asset,” says Baylis. “Plus, you then get the options on top, which will effectively juice-up the yield, depending on what happens with the share price. Our working assumption would be that the refinancing gets done, and subsequently the equity price goes up: let’s assume, for example, that the share price goes to 50 cents. In that case, you would be making an annualised return of about 14% over the life of the bond.”

In return, a portion of the funds the Noteholders’ subscribe will be used to service the refinancing, while a further portion will be used to develop the bauxite assets, with some of the funding providing working capital.

 

[Dona Ferentes]

not spruiking TER at all. Only thing I know is that Blair Athol coal was the anthracite of preference for firemen when Qld rail was all steam trains, as the low to almost nil percentage of fines in the coal meant the stokers had very little to shovel out !! Whether it burnt the best, I dunno.

There's a link to a 'research paper' from some mob, link below

TerraCom Ltd is an ASX-listed resource developer and export thermal coal producer at the Queensland industry icon mine, Blair Athol. In June 2020, TER completed the 100% acquisition of ASX-listed and South African thermal coal producer, Universal Coal (UNV).
TER has counter-cyclically placed itself in a position to improve efficiency and margins plus pursue organic mine growth. Cashflows will further swell once currently depressed coal prices rebound. These assets appear undervalued compared to our Base Case $0.27/share NPV valuation of TER. TER has upside on management’s record of delivering new projects from currently controlled development assets and/or by opportunistically securing acquisitions.

https://www.sharecafe.com.au/wp-content/uploads/2020/10/TER_CC_initiation_06Oct20.pdf

 

[finicky]

Superficial take as per usual but this looks horrible. Coal assets in South Africa? The very situation that S32 is trying to escape with an impairment. Moronic corrupt communist racist government with black empowerment policy. Unreliable and expensive electrical power.
Then a 'novel' approach to significant debt which looks like a convertible note to me at 8%
Whitehaven (WHC) for me if I dip the toe into this commodity.

 

[Dona Ferentes]

The securities of the following entities will be suspended from Official Quotation in accordance with Listing Rule 17.5 from the commencement of trading today, 1 October 2021, following their failure to lodge the relevant periodic report by the due date.

TERRACOM LIMITED (TER)

 

[greggles]

TER's profit per tonne of coal increasing from $101 in September to a forecast of $140 for the December quarter. They might as well make hay while the sun shines. The current energy crisis won't last forever, but there's certainly good money to be made now.

 

[greggles]

TER heading into blue sky territory today after announcing that coal from their Blair Athol mine is fully sold until the end of July 2022. The increasing coal price hasn't been hurting either. When I last posted six months ago, TER was getting $177/tonne, now its $300+/tonne.

Given the current geopolitical and energy crisis, coal isn't going anywhere anytime soon.

 

[Sean K]

TER heading into blue sky territory today after announcing that coal from their Blair Athol mine is fully sold until the end of July 2022. The increasing coal price hasn't been hurting either. When I last posted six months ago, TER was getting $177/tonne, now its $300+/tonne.

Given the current geopolitical and energy crisis, coal isn't going anywhere anytime soon.

View attachment 139196

All coal companies are going to be reporting some significant profits over the next two quarters. Is it too late?

 

[Dona Ferentes]

All coal companies are going to be reporting some significant profits over the next two quarters. Is it too late?

Or, too good to be true?

The British government said it would use a windfall profits tax on oil and gas companies to help raise funds for direct payments to households, totaling about £15 billion ($27 billion), to ease the country’s cost-of-living crisis.

Remember, it is Labor now in power. Appease the Greens and solve a problem (while creating another)

 

[Garpal Gumnut]

Or, too good to be true?


Remember, it is Labor now in power. Appease the Greens and solve a problem (while creating another)

"I would agree the Coal companies will get hammered.

If a Tory government in the UK can tax energy companies it will be a green light for others to follow, especially our own ALP and those green chappies.

gg

 

[Sean K]

Or, too good to be true?


Remember, it is Labor now in power. Appease the Greens and solve a problem (while creating another)

"I would agree the Coal companies will get hammered.

If a Tory government in the UK can tax energy companies it will be a green light for others to follow, especially our own ALP and those green chappies.

gg

Labor were obviously not going to announce any new taxes during the election but I guess they could increase the MRRT going forward with the support of Teal/Green in the Senate. But, the Greens would probably want to take it a step further and get a guaranteed phase out or prohibition by XX date I imagine. It will take a while for any thoughts of increased taxes to be voiced though as it was such a key point of difference that Liberal were trying to push. So, coal companies probably have some time before their bumper profits start to get confiscated. Maybe that's all factored into their SPs already though.

 

[Dona Ferentes]

I would agree the Coal companies will get hammered.

If a Tory government in the UK can tax energy companies it will be a green light for others to follow, especially our own ALP and those green chappies.

and a shot across the bows

Australia needs super profits tax on oil, gas: Henry​

The architect of Australia’s scrapped super profits tax says Britain’s decision to tax fossil fuel companies helps households deal with the energy shock.

 

[Dona Ferentes]

funny how things change. Out of Guinea, into thermal coal, debt reduction, looking towards dividends. Old contracts winding off, new Q results will be enhanced.

In the space of 18 months TerraCom (ASX: TER) has moved from a highly indebted coal company to one now with the potential to pay dividends. The remarkable turnaround in the coal price is driving exceptional earnings for TerraCom, as coal looks likely to have one of the longest and most profitable funerals of any commodity.

TER Executive Chairman Craig Ransley discusses drivers behind the company’s performance and share price over the past year with Tim McGowen

TerraCom: From debt to dividends – ShareCafe

TerraCom Limited Executive Chairman Craig Ransley discusses drivers behind the company's performance and share price over the past year with ShareCafe's Tim McGowen.

www.sharecafe.com.au

 

[Sean K]

Still flying. Wish I had have thought of this dynamic a year or so ago.

 

[MovingAverage]

Currently holding TER. Bought in around $0.45. They are kicking goals at the moment. Nice balance sheet, coal prices very good, and they've committed to paying healthy quarterly dividends. Been tracking sideways since early Sep with good support at approx $1 with resistance at around $1.10--if you're a swing trader it's like shooting fish in a barrel. Their last div was $0.10 unfranked but hoping next div will have level of franking...if you're chasing good divs over next 12 months take a look at TER

 

[MovingAverage]

Back on TER for Jan's stock pick comp. Last quarterly div was 10c fully franked--that's now 3 quarterly div's at around 10 cents and expecting next quarter's div to be at least 10 cents as well. Last closed at 0.93 so yield is very impressive and according to Market Index this is the best paying div stock on the ASX. Hoping to see this move back up to $1.05 levels.

 

[Logique2]

Picking TER in my 2023 tipping.

Can't say it any better than MA above: "..They are kicking goals at the moment. Nice balance sheet, coal prices very good, and they've committed to paying healthy quarterly dividends."

Healthy finacials, nice looking technicals, coal has further to run.

 

[houtman]

Terracom has had a big year.

It's one of my 3 hydrocarbon holdings chasing income.
(I'm 30% HC's, 30% Li, 30% Cu,Ni,Zn, 10% mixed)

TER shareholders on the one hand have -

• a mine life of only 8/9 years
• budget forecasts of - "Commodity prices are a key input into Treasury’s nominal GDP forecasts and the Budget, released last night (25 October 2022) is assuming that long-term coal and oil prices will start to normalise by the first quarter of 2023. This suggests:

Coking coal will fall to US$130 per tonne;
Thermal coal will drop to US60 per tonne;"

• Governments eyeing a pot of money
• and the usual worry of board and directors wishing to extend their tenure through left field ideas.

And on the other hand,

• Debt fully paid
• A F/F 1/4ly div of 60-90% earnings(26/8/22 announcement)
• Continuing high coal prices.

So shareholders are, understandably, a skittish lot, no one knows when the music will stop.

I'd prefer TER to continue on their current path, run the mine out and maximise dividends.

 

[MovingAverage]

I'd prefer TER to continue on their current path, run the mine out and maximise dividends.

Agree 100%