Expectations for June Quarter, page-331

the thing is, I don't think BCB are in that bad shape that the company is sold for $1.
Its actually weird, seeing BCB, its like looking at TER a few years ago. Decent mines, but with a massive debt hanging around the neck strangling the company. TER's timing was fortunate in that the price of thermal coal went through the roof and we could pay down our debt and are now debt free. BCB are in that same position but I don't think they will be as fortunate as TER were with short term coal prices so they need to look at alternative options.

I don't want TER to even look at Bluff. Its a dud of a mine, the geology sucks and results in a high cost mine operation which is suicide in the current pricing environment. Not only is the geology bad,the production levels are way too low to be able to gain from operational efficiencies so its largely uneconomic in the current pricing environment.

Burton on the other hand is very attractive. Much lower cost, closer to ports, much higher resource base and much higher opportunity to mine higher volumes. BCB's plan is to get production upto between 3.5mt and 4.5mt with JORC of 204 mt. Exactly what TER need, producing mine, distressed seller, long LOM. If we could buy ourselves into the JV with Lenton (Formosa) which BCB currently own 90% then it could be a really good deal for us.

Lets say we could buy into 20-25% of that JV we would be in a good position. We just made $112m in EBITDA in the 6 months from BA, less corporate expenses of about $8m, so about $104m at the lower coal prices for the 6 months. BCB recently sold 10% of Broadmeadows East into the JV for the equivalent of about $4 / tonne, but if we can get it for a bit cheaper (lets say $3 / tonne), it would cost around $120m-$150m depending on if it was 20% or 25%, which if we could fund that through funding the work programme for the Burton JV then it largely removes BCB's funding requirement for the development (which is $180m) and they can focus on reducing their debt. We use BA to fund development at Burton, without taking on much debt, whilst also using the current production at Burton to fund its development as its already producing.

Reckon there is an option there, but the key is coming out of this without much debt, thats how BCB got into this mess in the 1st place.