Arch Coal, Inc. (ARCH) Social Stream

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$ARCH arch is amazing opportunity here. Lear south starts producing by end of august. Fully ramps up by early 2022. Adds 3.0 mm tons of world class, low cost low vol met coal used in steel production. Will take the annual production of Lear mines to 10 mm tons a year. Prices have exploded of late. Doubled in few months. On call today mgmt said net back price to them at current prices $145 per ton. And w costs in low 50s, they would net $90 per ton. Or $900 mm per year. There is NOL over $1.0 B so ignore taxes.

900 mm in ebit just from Lear (there is couple mm tons other lower quality met plus some thermal that winding down - both cash generative but let’s ignore

MV $980 mm. EV $1.3 b. Maint capex $100 mm. Sga $70 mm. So FCF run rate next year 730 mm. Or $48 per share. Trades at RR FCF. Or 1.35x

If deserves 10x, worth $480….

Plus bot back 40% of stock in 11 months few yrs ago. Will repeat. In few years, shares could drop to 10 mm from 15.3 mm. $73 in FCF per share??