Stanmore Coal Limited

SMR Details

Higher Quarterly Production: Stanmore Coal Limited (ASX: SMR) operates in the mining, development, production and sale of thermal and metallurgical coal in Queensland. SMR owns 100% of the Isaac plains complex. The company has registered 850k tonnes of ROM coal production for Q2FY21, up by 33% on QoQ basis. The production was 2% lower for Q2FY21 on YoY basis. SMR’s total saleable coal production stood at 582k tonnes for the given quarter, 17% YoY up from Q2FY19. The company redesigned its mine plans, decreased the fleet capacity and strip ratios to minimize costs as coal prices are low and prime waste mined to the tune of 7.9Mbcm lower than previous quarters. During the quarter, SMR has decided to invest in further exploration at Isaac Downs and has been notified by the Queensland Government in January 2021 about the probable timeline for EIS Assessment Report completion by early March. SMR has finalized a bankable feasibility study and spent $0.88 million on Isaac Downs project studies, and engineering works so far. For Q2FY21, SMR secured a loan facility up to US$40 million with Golden Energy and Resources (GEAR) maturing on 30 June 2022.

Coal Production and Sales (Source: Company Reports)

SMR Offers Community Grants: SMR has initiated a community grant programme started on 1^st January where the company is providing grants up to $5000 to support youths in the region and to support the health and wellbeing of the community.

Appointment of CEO: As per the company reports, Marcelo Matos has been appointed as the new CEO of the company. 

Outlook: SMR estimates coal mining production to be lesser at Isaac Plains East for the next quarter as compared to the last quarters due to reduction in fleet capacity. It aims to minimize costs and strip ratios and undertakes mine plan transition to Isaac Downs. SMR remains on track for development in 2HFY21. 

Stock Recommendation: In the last one month, SMR has decreased by 7.73% and increased by 13.97% in the last three months on ASX. The stock is currently trading below the average of its 52-week price range of $0.500-$1.010, offering a decent opportunity for accumulation. On the technical analysis front, the stock has a support level of ~$0.695 and resistance of ~$0.838. Considering the company’s decent operational performance in December 2020 quarter, high ROE, modest outlook, and current trading level, we give a “Speculative Buy” recommendation on the stock at the current market price of $0.775 as on 23 February 2021.

SMR Daily Technical Chart (Source: Refinitiv, Thomson Reuters)

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