NEW FEATURE: Hallador Energy Company
A Coal Miner’s Quiet Rebirth as a Green-Adaptive Power Producer
By Alex Langton & Elric Langton | 22 April 2025
You have likely heard us express concerns that it is becoming increasingly challenging to filter out the noise on AIM with any confidence. Thus, today’s feature is the NASDAQ listing at $14.60. It is a punt on near-term expectations of a solid rerate, should its master plan bear fruit, and we think it will. However, there are risks, which we highlight.
Hallador Energy’s financial standing offers robust near-term liquidity, juxtaposed against its longer-term dependency on a transformational strategy that is still in motion. While the company presently demonstrates resilience through solid solvency metrics and a leaner balance sheet, its future valuation hinges critically on the successful execution of its Integrated Power Producer (IPP) vision.
Hallador, a firm rooted in Indiana’s coal seams, is undergoing a bold transformation, one that may seem unfashionable to ESG purists, yet undeniably grounded in industrial logic. Formerly a traditional coal mining operation, the company is now rebranding itself as an IPP, leveraging its Merom power plant to become a supplier of firm, reliable electricity to the hyperscale data centre industry. Indeed, a sector where the US will likely dominate, while our government claims to have ambitions of becoming Europe's data centre hub. Presumably, they haven’t compared the cost of our energy to that of any Western economy. Doh!
Stateside, it’s a strategy born not of environmental piety, but of cold economics and even colder realities of grid stability. And in an age when windmills and wishful thinking are expected to carry the industrial burden, the US administration and Hallador’s approach offer a rather sharp dose of realism that we haven’t reached.
Two Governments, Two Realities
To fully appreciate US administration and Hallador’s opportunity, it is helpful to consider the geopolitical absurdities of energy policies. Take the UK, where, under the incumbent Labour Party's Ed Miliband (Energy Guru - no sniggers) and Keir Starmer government, the pursuit of net-zero has shifted from aspiration to the realm of farce. Blighty, having shut down its own coal mines, mostly under Thatcher’s government and successive governments in a bid to project climate virtue, is now importing coal from Japan. Yes, coal mined, processed, and shipped across half the world, with a far higher emissions footprint than anything dug up in Northumberland, Yorkshire or the Midlands. It's greener on paper, if not in practice. The irony would be funny if it weren’t so expensive, and infuriating!
Contrast this with those across the pond under Trump’s influence, where there’s little appetite for appeasing climate zealots or genuflecting at the altar of carbon credits. The focus is on jobs, national resilience, and powering America’s industrial, digital, and AI needs, with reliable power sources and ample supply, not turning the grid into a sacrificial offering to a new secular religion. Hallador’s coal-fired power, although controversial, aligns neatly with this doctrine: to keep the lights on, maintain steady employment rolls, and ensure servers continue to hum.
Now we have that off our chests…
Financials as FY ending 31 December 2024
Hallador enters the year with ample liquidity, $7.23 million in unrestricted cash, supplemented by $4.92 million in restricted balances tied to escrow obligations, such as salaries. Its total available liquidity reaches $37.8 million, buoyed by a $30.6 million undrawn credit revolver.
A current ratio of 2.37, with $104.86 million in current assets against $ 44.30 million in liabilities, speaks to the company's short-term financial agility. Meanwhile, total debt has been halved to $44 million from $91.5 million in 2023, a deleveraging that enhances covenant headroom. The leverage ratio stands at 0.76x, with net debt to adjusted EBITDA of $57.8 million, comfortably below the 2.25x threshold applicable post-Q1 2025.
Profitability & Cash Flow: Non-Cash Coal Impairment