Coal production will begin, most likely, early in CY 2010. The first year should see 1 to 2 million tonnes and I would think they would only export the more profitable coking coal. At $100 to $200 profit per tonne that would make them anywhere from $100 mill to $400 mill in the first full year. The production and therefore profit should increase steadily from year 2. As the fallout from the US tonight hits, the companies in the firing line will be the ones not yet producing but also that will need to raise large funds (SDL for example). RIV have over $300 mill in the bank and only have to find 65% of the costs in the early years (while they concentrate on the Benga licence shared with Tata). So the first $500 mill of costs are covered. Before they get near to spending that the massive cash flows will have begun to flow in and will accelerate rapidly. There's absolutely no cause whatsoever to worry about a credit crisis because RIV DO NOT NEED CREDIT!!! RIV also has value in the fact that they have perhaps centuries of supply ie, will be producing when no one remembers how to spell Lehman Brothers. That is the type of asset that you want to own a part of.
RIV Price at posting:
$8.27 Sentiment: Buy Disclosure: Held
