Stanmore shares have jumped 175 per cent this year and the company has a market value of $2.3 billion.

The perfect timing description not only harks back to 2015 when Stanmore bought the unwanted Isaac Plains project from Sumitomo and Vale for $1, but also picking up BHP’s stake in the BMC joint venture at a time when coal prices are breaking into undreamed of price territory.

At the time the coal sector was climbing out of a collapse and Isaac Plains was among a handful of projects too small for the majors.

Morgan’s Tom Sartor even believes the company could get bigger, possibly through the buyout of the 20 per cent stake in the BMC joint venture held by Mitsui or possibly BHP’s Daunia mine.

He said Stanmore’s timing of the deal during “unprecedented coal price strength” supported a 12-month pay back, rapid de-leveraging and potential dividend upside for investors.

The BMC deal gives Stanmore production of 10.7 million tonnes a year of coal.

Sartor estimated Stanmore held $US680 million in net debt on the May 2 handover of BHP’s stake in BMC and now said the base case forecast supported a 2022 EBITDA of $US1.4 billion at about 60 per cent margins, a 12-month payback and a net cash position in early 2023 including full debt service.

“We are increasingly of the view that stronger-than-expected met coal pricing will persist through calendar year 2022 on solid demand ex-China, coupled with very tight supply and exacerbated by disruption to Russian exports,” Sartor said.

“The BMC acquisition has timed perfectly against this and provides a strong financial and strategic platform from which to grow, or failing that, release significant dividends.

“Stanmore offers 48 per cent to 102 per cent upside to our base/bullish net present value scenarios, respectively.”

Morgans has given Stanmore shares an “add” rating.