Natural Resource Partners (NRP), mcap=$642m, price $51.32 vs $43.00

NRP pitch:
– One of the cheapest names trading at 29-40% normalized FCF yield.
– Shares worth 2-3x their current valuation.
– Natural resources company with a significant event angle regarding a hidden asset.
– Owns, manages, and leases natural resource properties to mine operators.
– 87% of pre-corporate EBITDA comes from the Coal Royalty business and the rest from the 49% ownership of Soda Ash assets.
– The owner of the remaining 51% is a publicly traded entity $SIRE that has received a strategic bid for the company.
– For NRP, this minority asset is worth ~75-100% of today’s market cap, but only accounts for 14% of the current run-rate FCF.

NRP valuation:
– Based on a normalized coal price environment in 2024/2025 (i.e. in-line with 2017-2019 pricing), the company is set to generate $13-17 of FCF/share exiting 2025.
– Currently NRP is generating a run-rate FCF/share of ~$25.
– With the coal business at 6-8x multiple and factoring the value of the Soda Ash business, NRP is worth 2-3x of current prices.

Exp. gain: +220% to $137/share

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