bgf initiatings with 'strong buy' $2 target

I am sure most people have seen BGF just initiated on BTU with a strong buy, $2 price target and $2.40 valuation.

See below:

Bathurst Resources has the assets to emerge as a New Zealand focussed mid-tier producer in the highly lucrative premium coking coal sector. The initial acquisitions on the Buller Coalfield were fragmented, but the purchase of the Galilee Energy assets has provided ongoing coal operations and the basis for a larger, low capex, moderate cash cost continuous operation.

The current plan offered by the company is for a 2 Mtpa operation at the Escarpment and Deep Creek, expanding to a 4 Mtpa operation, producing primarily a premium low-fluidity hard coking coal for Asian markets.

Project planning and feasibility studies are at an advanced stage and the expectation of a late 2011, or early 2012 startup are on track. The coal is expected to attract a reasonable premium of 5-15% to the hard coking price, which is now at US$225/t. Continuing tightness in supply over the next few years should ensure a healthy bottom line for Bathurst in the early stages of production.

The initial off-take deal with coal traders Stemcor, where prepayment for coal can be used as a source of funding, reduces the reliance on borrowings and provides ready access to niche markets. A second offtake deal is under negotiation.

The project carries some risk. Studies are underway on the project water balance, and water availability may yet prove a limiting factor in the ultimate scale of the project beyond 4 Mtpa.
The share price has increased significantly since November 2010, however the life of mine valuation of $2.40 represents significant upside on a Net Asset Valuation basis.

Further exploration is likely to provide further resource upgrades and extensions to mine life.