whats happenning ???, page-43

While NMR has coal as shallow as 70m deep, let's compare the stripping ratio for both company's main seams.

AFR have a long term SR of roughly 1.6. NMR's main seam of 15m thickness has av.130m of overburden, for a SR of about 5.

With NMR and AFR having very similar coal, of very similar thickness, the major difference in operating costs in theory between the two company's would be in the removal of overburden. AFR quote that they can remove waste at a long term cost of $2.85/bcm, and mine/process coal at around $4.40/t.

Using a SR of 5, NMR would have a ROM OPEX of approximately $18.85/t.

To wash this ROM coal for the domestic market, AFR are quoting a further cost of $2.90/t. If we were to use this figure considering our likeness in coal quality, this brings our domestic coal costs to a total of $21.75/t.

Current domestic prices sit at around the $1.50/MJkg mark, which would denote a sales price of nigh on $30/t at the gate for our coal.

$8/t margins doesn't sound like much, but our seam thickness would allow for bulk tonnages to be put through the gate. Bear in mind that AFR would be looking at making no more than $12/t margins on domestic sales themselves.

Where the real profits come in is the export market, and with the costs to boost domestic coal up to an export standard sitting at less than $10/t as per AFR's scoping study, and also bearing in mind that export grade Botswanan coal is projected to sell for $80/t+ from here on in, it really boggles my mind that some here are writing off NMR's coal as being uneconomic already! Sorry for that drawn out sentence, but its scaremongering from some of you, and nothing more.

Wait for the scoping study. I expect it to be a ripe success.