old news, new news, qtr 1 2011 looks good, page-76

GS ,excellent post .

The current open cut is high cost ,but that short term project is just pocket money for CCC until their real asets are developed .
Would they have been better off NOT developing Ferreira even though it was higher cost per tonne ?

Of course not .Its all money .

There were many benefits for CCC including some cashflow ,rather than just waiting 12 months for one of the others to come online .Wy not make some pocket money in the mean time .

There are other factors that management take into account when sizing up a project .They dont have to be highest grade ,they dont have to be shallow ,the seams dont all have to be ultra thick .
What is important is can the project make money when all inputs are taken into account .

For bulk commodities ,logistics is the most important consideration bar none .

Capital costs and ongoing servicing of loans is another important consideration .

CCC is a winner on thse points .

CCC have great infrastructure , and very low capital outlays that make these assets worth more than if they were in an isolated area .
CCC are doing bread and butter stuff .It doesnt have the wow factor of being the biggest or the cheapest mining costs ,but they can make money .

The area and geology is very well understood ,and the management are very experienced in open cut and underground mining and with local kmowledge .Coal mining is a job for professionals ,but it is not rocket science .

CCCs other developments are moderate mining costs per tonne ,but this is acceptable when you consider that they dont have to spend $1bn to build a mine .Some other mines may be low cost ,but some dont factor in massive loan interest ,or the dilution to fund a big capital cost mine .

CCC is operating in a niche area .The fish may be smaller ,but sometimes the result can be just as satisfying .

There is nothing on the horizon ,either in the short ,medium or longer term that can change the supply /demand equation for coal in the next few years .
Coal is just at the start of a multi year demand boom .

The coal industry has little hope of keeping up .

I have seen statistics used by the coal loading industry that is used to underpin their feasibility for expansion .
Getting that coal to the market will be the challenge .
All analysts agree that coal is the place to be and most have average coal prices well over $100t for the next few years .Floods and cyclones will only place more pressure on an already tight market .