gazman2011, page-17

G'day Muppet,

No worries mate no personal offense taken.... your statement was the best to highlight a few things.

Mackenzie River is a different beast again.... but equally insidious. These guys have slightly better seams but still rubbish AND their seams are thin.

When you look at:
http://www.stanmorecoal.com.au/DataStore/Announcement/158e7808-43a7-434c-ac62-891d3fd293c4/2010.09.13%20-%20SMR%20ASX%20-%20Rodman%20&%20Renshaw%20Presentation.pdf

You will see once again the disastrous yields. These are based on ply samples that segregate the coal and stone into sections of material that should have similar characteristics. Without looking at their sampling regime and how they have done their work its hard to say exactly how much effect the ply sampling will have on a whole seam composite yield and the inherent difference in a washplant yield.

Having said that with a high ash coal that is washing in at 50% in the lab and two times quite worse (~high 40%'s) on the only 3 washability samples they have done. It doesn't set a pretty scene for the wash plant yield. In good coal mines with reasonably consistent and clean coal the drop in yield can be 5-7%. You can double and sometimes triple that for a banded high ash coal due to the difficulty in separating stone from the coal.

When these guys start saying things like their coal is 1.6 g/cm3 you get an idea that all is not well. Good coal comes in at 1.4 and often less for low ash coals. The problem is that the density contrast between the coal and the stone is decreased. Therefore more product is directed towards the reject circuit and more stone is directed towards the product circuit.

Fine grained clays are not nice. I assume not too many of you guys have seen or understand what a coal wash plant looks like or how it operates. It starts with a series of screens that size the mined material. The fine material is sent to float cell that will take out a certain percentage of the coal. Larger fragments are sent to a cyclones and spirals and other gravity separation methods. Coal that is attached to pieces of rock can end up too heavy and report to the tailings. Fine dispersive clays can end up anywhere due to their size, weight and shape distribution.

Picture you have a heap of screens and sensitive equipent and you pour a heap of flour and water into it. What would happen?.....you would clog it up and it would not work as intended. And that is why these coals have been branded as having no to marginal economic value.

Second scenario: you throw away half your product? What does this do to the strip ration? Well on a 1:1 basis you are doubling it.... not a good way to business.

Thirdly: you have weak crappy clays all over you mine. You want to dig a hole a 100m deep. You have to bench it out and you have to drag away the spoil for miles because its like a cake of soap and will slide down hill any chance it gets. So increased mining cost, poor slope stability, terrible yields and a product that cant even make a 10% coking spec.

Sorry guys call me a down-ramper all you want. Show me how they can make money out of this before you call me out again. And gratz to the traders who made a 100% and sold out....your the smart ones.

Gaz