resources bowen coking coal ltd

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Analyst Date Price Target

Jon Bishop 23rd April 2021 $0.15/sh

Company Update

Investment case

Commercialisation via third party infrastructure agreements presents a material near term catalyst and has catapulted Broadmeadow East as the most advance of the Company’s four coking coal projects in Qld. Further to which, we see a clear discrepancy with the market attributing little value to the low capex, early production option at Isaac River or the large “Company Maker” Resource of 177Mt at Cooroorah. Growth to the Hillalong Coking Coal Project - in JV with Sumitomo – looks to have momentum. The Farm-in Agreement agreed in Nov 2019 provides for Sumitomo to earn a further 20% by funding a second phase of exploration. This effectively provides a look-through Valuation for Hillalong of between $25m and $50m vs BCB EV of ~$65m. We expect growing market awareness of BCB will ultimately see the Company trade towards our $0.15/sh Price Target. Speculative Buy.

Key pointsy Broadmeadow East is the most commercially advanced of BCBs four

coking coal assets – 33Mt (10.6Mt M&I) JORC Resource;y Secured access for 1Mtpa (plus a further 1Mtpa subject to negotiation)

at New LentonJV CHPP;y Permitting all but complete ahead of development decision Dec H.

6month plan below;

y Isaac River – 8.7Mt (8.3Mt M&I) JORC Resource;y Stage 1 Scoping Study Complete with permit and environmental

approvals submitted;y Low capex start-up due to existing proximal infrastructure. 6mnth

forward plan:

y Hillalong – 43Mt M&I JORC Resource;

Bowen Coking Coal Ltd Year End 30 JuneShare Price $0.069Fully Paid Ordinary 952.0 Options @ Various (up to $0.035/sh) 29.9 Perf Rights 20.0 Fully Diluted Shares on Issue 1,003.9 Market Capitalisation $69.27Debt nilCash $3.50Enterprise Value $65.77 Year Low - High $0.040 - 0.071Ave. Daily Volume 1.1m

Directors NE Chair Mr. Nicholas JorssMD&CEO Mr. Gerhard RedelinghuysExec Dir Mr. Blair Edward SergeantNE Dir Mr. Neville William SneddonNE Dir Mr. Matthew Latimore

ShareholdersM. Latimore 13.95%Cape Coal 11.73%

Company Details Level 7167 Eagle Street, Brisbane QLD 4000

GPO Box 1465 Brisbane QLD 4001Phone: +61 7 3191 8413

Email: [email protected]

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Disclaimer

ASX Limited ABN 98 009 642 691 and its related bodies corporate (“ASX”) did not prepare any part of the report and has not contributed in any way to its content. The role of ASX in relation to the preparation of this research report is limited to funding its preparation, by Euroz Hart-leys Securities Limited in accordance with the ASX Equity Research Scheme.ASX does not provide financial product advice. The views expressed in this research report may not necessarily reflect the views of ASX. To the maximum extent permitted by law, no representation, warranty or undertaking, express or implied, is made and no responsibility or liability is accepted by ASX as to the adequacy, accuracy, completeness or reasonableness of the research report.

Bowen Coking Coal Ltd(BCB $0.069) Speculative Buy

RESOURCES


y Farm in with Sumitomo Corporation to spend up to $7.5m to earn 20%: Phase one ($2.5m for 10%) completed and phase 2a ($2.5m for 5%) is underway;

y Resource extensional drilling ongoing. 6mnth plan below:

y 50:50 JV between BCB and M Resources to market all BCB’s product from all projects. M Resources will provide $15m towards development of any of these assets;

y We retain our Speculative Buy rating and 15cps Price Target.


RESOURCES


Our Share Price Sensitivity

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A$/shVol '000 BCB - 12 month price history

Our Market Sensitivity Valuation - $0.14/sh

Price Target - $0.15/sh

Bull Scenario - $0.25/sh Isaac River developed as a rapid, low capex cash generator. Hillalong exploration delivers high quality Resource at upper end of expectations and Sumitomo farm-in increases. Cooroorah attracts corporate action for BCB as a whole.

Base Scenario - $0.15/sh Isaac River developed as a rapid, low capex cash generator. Sumitomo funds Hillalong exploration which delivers high quality Resource in middle of expectation range. Cooroorah sold down to fund development of other assets.

Bear Scenario - $0.02/sh Coal price drops 10% below our forecasts and/or permitting risk heightens and/or drilling fails to yield an economic resource.

Company SummaryBowen Coking Coal Ltd (BCB) is a Queensland based coking coal exploration company with advanced exploration assets. The Company owns the Isaac River, Cooroorah, Hillalong and Comet Ridge coking coal Projects in the world-re-nowned Bowen Basin in Queensland, Australia. An aggressive exploration and development program underpin the business strategy to ad-vance the pipeline of quality assets alone and in JV partnerships.

DisclaimerThe projections and information above is based on the set assumptions outlined. Due care and attention has been used in the preparation of this information. However actual results may vary from forecasts and any variation may be materially positive or negative. Forecasts by their very nature, are subject to uncertainty and con-tingencies, many of which are outside the control of Euroz.

Key Variables

ASSET VALUATION A$m A$/sh Isaac River - 8.7Mt @ adj. sector ave. 13.8 0.01

Cooroorah - 177Mt @ adj. sector ave. 93.5 0.09

Hillalong - risk adj. Sumitomo Farm-in 24.4 0.02

Other (nom.) 5.0 0.00

Cash 3.8 0.00

Unpaid Capital (opt. in money) 2.1 0.00

Debt - -

Total 143 0.14

Euroz Forecast FY'19a FY'20 FY'21 FY'22 FY'23 FY'24

AUDUSD $0.72 $0.67 $0.75 $0.75 $0.74 $0.74

HCC US$/t $201 $155 $170 $170 $170 $170



37

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Contact DetailsEuroz Hartleys Securities Limited +61 8 9488 1400

Research AnalystsJon Bishop - Head of Research +61 8 9488 1481Mike Millikan - Resources Analyst +61 8 9268 2805 Michael Scantlebury - Resources Analyst +61 8 9268 2837 Steven Clark - Resources Analyst +61 8 9488 1430Trent Barnett - Senior Analyst +61 8 9268 3052 Gavin Allen - Senior Analyst +61 8 9488 1413Harry Stevenson - Industrials Analyst +61 8 9488 1429 Seth Lizee - Associate Research Analyst +61 8 9488 1414

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