Ann: Work commences at Escarpment, page-24

I completely agree that stopping the cash bleed was required asap. So at least they have done that - for now.

I find it hard to believe that Hamish said for years (even after the coking coal price was getting crushed) that BRL would sell their coal at a 5-10% premium to the HCC benchmark, whereas now clearly their offtakes have fallen over and they are now talking about a 5-15% discount (initially!!). As mentioned previously the Escarpment reserves are definitely not HCC unless the coal is washed. BTW if anyone cared the sulphur levels i.e. 4%+ in the coal for North Buller will make that coal almost unsellable and it is very difficult/impossible to wash out sulphur (but North Buller probably doesn't get developed until 2020+ anyway!).

In terms of China - my understanding is that the key reason why steel output is so high is that China is exporting a lot of steel at the moment i.e. a lot more than previously. Also, I think it is actually quite bearish for coking coal prices that China's steel production is at record highs but coking coal in trading well into its cost curve.

China is definitely currently loosening policy particularly around property restrictions in order to stimulate growth to hit their 7.5% growth target. However, China has to rebalance their economy towards consumption and away from fixed asset investment (property, infrastructure, manufacturing) and slow the growth in debt. This will take time, however it is highly likely the end result will be slower GDP growth, much slower fixed asset investment growth and lower natural resource demand, particularly for early stage commodities like coking coal and iron ore.

That said, given high quality coking coal likely is truly in short supply and currently trading well into the cost curve, there is likely more upside risk to the coking coal price from here than downside risk.

If only Hamish hadn't wasted all our money, then a low capex, lowish cash cost, higher quality project like Buller would be very attractive.