with permission from my source just then, here are some extracts from the SC report.
"Riversdale`s production growth profile is ramping up towards 6mpta of hard coking coal production in 2013-14 along with 2mpta of export thermal coal and 4mpta of domestic coal . The plans in the initial stage are to use the existing rail line to Beira that CVRD also plans to use for their first stage of growth (capacity 18mpta) of which RIV only want 6mpta of rail capacity. As they ramp up production Riversdale plan to barge the coal down the wide and flowing Zambezi and load it straight onto the Panamax ships in the Zambezi estuary."
"As part of their longer term growth plans RIV are already looking at barging down the Zambezi to the coast and then using trans shipping (loading barges onto larger vessels off the coast) which is more cost effective than rail and also avoids any potential longer term rail or port bottleneck issues. For example if you used trans shipping to cape size vessels it would reduce transport handling costs to around $8 from $20 per tonne and bring down total costs to $33 a tonne rather than $55. "
"It is easy to see that even if you used more conservative cost numbers, that Riversdale has a very high margin business in Mozambique. 6mtpa of hard coking coal, 4mtpa of domestic coal and 2mpta of thermal leads to EBITDA well north of $1bn once the project is fully ramped up."
"RIV at $10.80 looks very interesting. You can see that if they get the resource base up to 3-4bn tonnes over the next 18 months or so, that using a highly conservative EV/T of resource of $1 gets you to $20-25 per share as a starting point."
"If you believe coal prices are going a lot higher (coking coal $500 and long term prices of $200 like Xstrata have been telling people) then you can spit out valuations well north of that level with NPV`s well north of $35-40 before you talk about what premium to NPV a corporate would pay . RIV could potentially be earning NPAT north of $300m 3 years from now and north of $1bn a year from 2014 onwards if you use more upbeat long term commodity price assumptions. "
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