U.S. coking coal prices are beginning to explode like never before in history due to a lack of spending on coking coal exploration and the lack of development of new coking coal mines in recent years! Last week, Hampton Roads Metallurgical Coal prices gained by $35 or 17.95% to $230 per tonne! Click here to see the daily closing prices of U.S coking coal! Three weeks ago, U.S. coking coal was only $172 per tonne, but has since gained by a stunning 33.72%!
The Hampton Roads Metallurgical Coal price is the best estimate of what the Donkin Coking Coal Mine's Metallurgical Coal will sell for after Donkin restarts production. Similar to how last year's $350 million dredging project turned the Hampton Roads Port of Virginia into the deepest water harbor on the U.S. East Coast, Ernie Thrasher the largest U.S. exporter of coking coal to Asia has just invested $75 million dredging the Port of Sydney in Cape Breton, Nova Scotia, for the benefit of Donkin's owner Kameron Coal and the expectation that it will soon restart production at Donkin and ramp up to full production capacity of 3 million tonnes of saleable coking coal per year for exports to Asia!
Morien Resources (TSXV: MOX)'s gross production royalty in Donkin is worth between 2%-4%. Based on the annual permitted production rate of 3 million tonnes we estimate that MOX's royalty will average approximately 2.67%.
At a coking coal price of US$230 per tonne, which is equal to CAD$288 per tonne, Donkin at full capacity will generate annual revenue of CAD$864 million. This will result in MOX earning annual royalties of approximately CAD$23 million!
Donkin has a mine life of more than 30 years! Conservatively, MOX's Donkin royalty will likely be worth approximately 10X revenue or CAD$230 million once Donkin is producing at full capacity! After adding another CAD$5 million in value for MOX's cash position and MOX's Vulcan Materials (VMC) Black Point royalty, MOX is likely to trade at a market cap of CAD$235 million once Donkin is operating at full production capacity!
MOX only has 50.91 million shares outstanding, which means a market cap of $235 million will value MOX at $4.62 per share! MOX closed last week at only $0.335 per share with an extremely low market cap of $17 million! MOX has upside potential of 1,279.10% with very little downside risk!
Past performance is not an indicator of future returns. NIA is not an investment advisor and does not provide investment advice. Always do your own research and make your own investment decisions. This message is not a solicitation or recommendation to buy, sell, or hold securities. This message is meant for informational and educational purposes only and does not provide investment advice.