Here's Barry's piece......Coal is still king in the world power...

Here's Barry's piece......
Coal is still king in the world power game
Barry FitzGerald
June 30, 2008

BETWEEN 2005 and 2007, thermal coal prices averaged a little more than $US50 a tonne. Now the price is more like $US170 a tonne, despite all the talk that coal's days as the backbone of the world's electricity generation system are numbered.

So what value is meant to be ascribed to a tightly held explorer with a good shot at outlining a "starter" 100-million-tonne resource of the black stuff in the near term? Particularly when its project is in close proximity to the boom in demand from the string of coastal power stations India plans to build.

That is what is being played out in Rey Resources, the June 2006 float that holds a big tenure position in Western Australia's Canning Basin, where the potential is said to be for more than 1 billion tonnes of coal.

Rey climbed 3¢ to 32¢ on Friday, a 10.3% advance when just about all else around it headed south. Now that it has done the hard yards with Aboriginal groups, Rey is punching its first holes into the region's coal seams, some 150 kilometres inland from Derby.

Any number of groups have explored the Canning in the past for coal, some with a focus on its higher-value coking coal potential. Rey's focus is on thermal-quality coal and it has set itself an initial target of getting a 100-million-tonne resource under its belt.

Samples are heading off to labs now to confirm the quality of the coal and assuming that box is ticked, interest in the project's potential will switch to the group's initial resource estimate, likely in the first quarter of next year.

It is worth noting that access through the port at Derby to Indian and Asian markets would be about four days closer in sailing time than alternative supplies from the infrastructure-constrained Queensland industry.

Cheering Rey on is its 15% shareholder, Gujarat NRE, the Australian subsidiary of the Indian coke manufacturer.

As a side note, Rey has decided that with its strong focus on the Canning, it would be best to either float off or sell off its big ground position in Chile that came with its 2006 float.