New Colombia Resources Inc (OTCMKTS:NEWC) Is Running On Chinese Coal Potential

New Colombia Resources Inc (OTCMKTS:NEWC) has been on our watch list for a while. As we outlined here, the company's double pronged approach to operations sets it up to benefit from two distinct growth industries, and announcements across the last couple of months have illustrated this potential. With this said, New Colombia had a pretty rocky year last year, with peaks and troughs making for a similarly rough ride for shareholders.Throughout December, however, the company logged some solid gains, and it looks as through this momentum is set to carry through to the first quarter of 2017. Further, if the company can stay its course, there's plenty more upside to be had beyond this quarter.Here’s what's happened to get this run started, and where we are looking as indicative of its continuation.New Colombia is a coal mining company, and this mining accounts for its core operations. The company mines rock, which it then crushes and sells to the construction space, and also coking coal, from which steel producers create coke by way of forcing out the impurities in a coking oven, and which is a key ingredient in the steel making process.Coking coal had a great year last year, before taking a bit of a hit in December. A look at its price chart reveals almost a mirror image of New Colombia's price chart, which seems counterintuitive, but we're not going to attempt to dissect that here.As well as the mining operations, the company recently announced that it is developing a portfolio of medical marijuana products, and by way of a partnership with a company called Advanced Imaging Projects LLC, intends to submit an Orphan Drug application to the FDA in the US.December brought with it a number of announcements related to the cannabis venture, bringing an entity called Sannabis into the fray, and each announcement has translated to some immediate upside in its market capitalization. This tells us that markets are responsive right now to anything cannabis related (this isn’t surprising, since it's only eight weeks or so since a number of US states voted on recreational legalization) and paints a pretty rosy picture for the company as this element of its operations develops into something tangible.We're looking a little nearer term, however, as our real value driver.On January 5, 2017, New Colombia announced that it has signed a $90 Million purchase agreement for metallurgical coal with American Steel Industries, LLC. Metallurgical coal is the coking coal we discussed a little earlier. Basically, New Colombia is going to supply the coal through its mining operations, and American Steel is going to ship this coal to South China. At the China end, it will be picked up by a Chinese government owned steel company. The shipments will start from Colombia in April, at which point New Colombia will supply 60,000 tons for shipment, and will continue through May (40,000 tons), June (40,000 tons) and July (60,000 tons). Between July and December, New Colombia will supply another 60,000 tons for shipment per month.The magnitude of this deal can't really be understated. New Colombia currently trades for a market capitalization of $6.5 million. It's now set to generate $90 million in revenues throughout 2017, from this one contract alone.There's risk, of course. The company is notoriously unreliable with its filings, and there's no real clarity as to exactly how much, if any, cash it has on hand right now. The latest number we have derives from its first quarter filing last year, at the end of which New Colombia reported a little over a half million dollars in cash and equivalents. The assumption is that there's more in the kitty right now, but of course, there's no guarantee. If there's not, we're almost certain to see some dilution if the company is to meet its contractual metallurgical coal requirements.With that said, there looks to be so much disparity between current value and potential 2017 revenues, that there must be some upside no this one, despite the potential for dilution.We will be updating our subscribers as soon as we know more. For the latest updates on NEWC, sign up below!Disclosure: We have no position in NEWC and have not been compensated for this article.