Stanmore could be a takeover target itself in this environment as its The Range project is strategically located near Wandoan and it has a market capitalisation of only $A139 million.
“A positive decision would underwrite basin infrastructure and we believe would substantially increase confidence in Surat projects including Stanmore’s,” RBS Morgans analyst Tom Sartor said in a research note.
“We believe the compelling outlook for seaborne thermal coal still presents a strong opportunity for Surat Basin developers to secure the required customer support (offtake/JVs) and funding.”
Sartor said investors had shown that they supported developers or projects that could secure joint venture investment on premium terms.
“Such deals also allow for much less dilutive equity raisings once customer support is achieved so we believe that Stanmore would build instant market confidence and attract a stronger investor if it could execute a JV sell-down at The Range on attractive terms, partially de-risking funding obligations of around $A600 million,” Sartor said.
Earlier this month Stanmore launched a bankable feasible study for The Range project that will consider the viability of a 5 million tonnes per annum operation over 26 years.
The Range BFS team will consist of Xenith Consulting, Minserv Group, DRA Group and AECOM.
The BFS follows on from a prefeasibility study on the project which was completed last November.
The BFS will be geared towards further refining the project’s design, specification and cost to a level that will meet project financing requirements.
The project currently contains a JORC-compliant marketable reserve of 94Mt.