Target $9.36, page-1242

There can be a material supply response... it's just that it'll take a few years to occur because there hasn't been enough exploration and/or development work done.

FWIW and without being to specific; I'm consulting to a client right now (one among many) who is only just now trying to play catch up. For the last seven/eight/nine years they've been on shoestring budgets with the exception of a short reprieve in the coal price during 2017/18. They've done absolutely zero exploration for five years and haven't spudded an exploration hole for about eight years. The company downsized and removed nearly all the intellectual capital over the last decade. The client isn't digging blind yet, but, they are currently mining outside of JORC measured areas and will be into areas with insufficient data in five years and will need to close without more exploration and development. They're very aware of the situation and know that it'll take at least 18 months from today to double the known measured reserves so that mining can continue for another few years with financial confidence. Even then, there is another 200-500 years of coal along strike and down dip at current extraction rates, but, this coal just hasn't been defined well enough to mine it today.

I can confidently state that this isn't the only operation where things are getting very tight and timeframes into the future are looking short.

The human expertise, engineers and geologists, is being dawn into these operations first. Currently producing mines have got money now and they need to spend it on exploration and development so that they can continue to mine for more than a few years. This leaves the pure greenfield companies with an asset that can't be mined because they can't build a team with the knowledge or required ability.

So the question then becomes one of "when will this happen" ... well... greenfield to a significant mine sending coal down the rail takes a good 12-18 months minimum (with zero red tape) ... and this is on the provision of having enough technical and skilled people to make it happen. Think for a moment how mining courses at each university in Australia have been pumping out 3 or 4 graduates a year... where are the engineers going to come from??? ... and geologists... they're needed to explore the greenfield ... where are they going to come from .... and even if they come directly from university... they're still going to need years of experience before they can be considered competent ... unless they work for BMA and are a diversity hire, in which case they'll be fast track promoted into a senior management position ... which explains a lot about how BMA sold their BMC assets to SMR for next to nothing. So until there is a shed tonne of money thrown at exploration and development, there will be no response... and to get this exploration and development happening, the coal price will need to stay high. How high and how long? That depends on how quickly the response occurs and we start to go in circles looking for answers. It's happening slowly, but, I can't see these higher prices going back to 10% above cost of extraction for at least four or five years, and very possibly longer. The 2020s is going to be a good decade to be a coal miner.