500mt of coal $??, page-34

It's too deep for the type of coal they are talking about - sub-bituminous thermal coal.

Illawarra is coking coal which fetches around 3 times the price.

There is also a big difference in infrastructure between industrial NSW and the Western Downs in Qld. You have to compare apples and apples, and the other mines in that area are mines such as Wilkie Creek, Acland, Commodore, and Kogan Creek. They either feed power stations built right next to them, or they are on existing rail lines.

They all are open cut mines where top coal is around 30m down to 100m. Once it gets much beyond 100m it's not considered economic, and that's where Cougar's Wandoan coal starts.

MTE are looking at underground mining that quality coal not far from Wandoan - take a look at their performance to see what the market thinks of that idea in the current coal environment.

Which is not to say Wandoan is worthless by any stretch, just that it's not a top tier coal project for a miner. The reason they mine Illawarra coal at 500m is because they've largely exhausted the shallower stuff. The Surat by contrast is full of unmined coal at open-cut depths - there's just no way to get it to market unless it's right on the rail line.

If Xstrata go ahead with their Wandoan mine, I would think Cougar's tenement would start to look faintly attractive because all of a sudden it's located on a rail line to port. But it's still middling quality coal at depth, and if Xstrata are talking about scrapping or halting indefinitely their massive 20Mtpa open-cut mine, then a deeper, higher cost, lower volume underground mine of the same coal in the same location is even less attractive.

It's a real pity because Wandoan is perfect for UCG IMO. The Surat coals have high hydrogen content so they're great for CTL. There's also the prospect of gas and electricity supplies to the mines going in in that area if/when they do go ahead.

But I understand why they just want to get rid of it, after the way they've been treated by the government and the media.