The following is excerpted from the question-and-answer section of the transcript.
(Questions from industry analysts are provided in full, but answers are omitted - download the transcript to see the full question-and-answer session)
Question: Jacob Gomolinski-Ekel - Ellington Management Group - Analyst
: Just I guess a follow-up on the capital allocation question. I understand $40-odd million of the "growth" CapEx has to go towards Cumberland.
Maybe can you talk about like how you think about, once the impoundment's done, like do you think about a sale of that asset, what you think the
sort of goalposts are for asset sale proceeds? I'm somewhat challenged to understand who could buy it.
And then there's still, ex that, $25 million of growth CapEx, I mean plus a tremendous amount of liquidity on the balance sheet. Like have you
considered, or I would maybe even say, like I'm curious what the IRR -- unrisked IRR is on your growth CapEx, given the -- if you could tender for a
term loan at 15% risk-free IRR, and that would be immediately accretive, given how small the market cap is. You're talking about like 15% immediate
accretion to the stock, if you were able to allocate the full $65 million of growth CapEx there, so just in debt discount capture alone. So just trying
to -- I think lenders would be very amenable to having that conversation of buying back debt.
Question: Jacob Gomolinski-Ekel - Ellington Management Group - Analyst
: Okay. Well, then we should absolutely, I think have those conversations, because I can tell you, like I suspect -- I mean I won't speak for everyone,
but it's -- I hear you that the price deck has changed, but it's a little -- the fact that the bar is higher for buying back debt in terms of looking to see
improvement in the markets versus the bar for growth CapEx seems a little bit upside down, but I'm sure I'm misunderstanding something. So
anyway, I appreciate the color there. It's very helpful.
Question: Orestis Hadjipanayis - Crevalon Ltd. - Analyst
: I'm a recent investor at Contura, and congratulations on the cost side. You've done a great job at the last quarter. And my question is pretty simple.
As we look at our stock price that has collapsed beyond anyone's imagination, I would say -- and I do understand that the company's focus right
now is towards debt reduction, rather than buying back the stock. I believe that even there's a very small amount of money allocated towards share
buyback, maybe even $5 million, $10 million, that small amount of money, but that would definitely get us -- we could retire quite a lot of shares
with that small amount of money. So and that would also send a good message out to the market and address this collapse in the share price. So
my question is, is that something that you'd consider doing, given that it only takes a small amount of money? That's my question.
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