growing our market cap

Found this article when checking the background on Coking Coal and it very closely replicates what we are attempting to do at Nowa Ruda. It talks about a market cap for similar sized operations of a $45m-$90m range. The big difference here being our lower cost Poland operation, lower cost employment, higher quality coking coal and for the record, this is straight of the BMB website:

“Over the two decades up until closure the mine (1995) Nowa Ruda produced approximately 1Mtpa of coking coal and over 90% of this coal was sold into local coke plants, with the majority being sold into the Walbrzych plant, located only 40kms away and linked by rail. This gives Balamara further confidence that the end-product may be acceptable to local coke plant requirements.

I mentioned in an earlier post that our company's market cap of $32m is ridiculously low. This is just one more article to support that theory.

Britain's new age of coking coal From: The Australian October 22, 2013

New Age Exploration (NAE) MELBOURNE tiddler New Age Exploration has set out to do its bit in reviving Britain's coal industry, or more specifically its coking coal industry. British steel industry is now totally reliant on imports. Thermal coal for power generation is on the nose in Britain from global warming concerns and is not an industry that seems to have much upside there. Coking coal is a different story. Its higher value -- it recently climbed back over $US150 a tonne in seaborne markets -- reflects its much tighter supply compared with its thermal coal cousin.

What's more, in the eyes of the British public, coking coal mining is seen as a job creator in parts of the country where jobs are in desperately short supply. And funnily enough, coalmining of any description is seen as being a more environmentally friendly practice than the new boy on the block -- the coal-seam gas extraction industry with its controversial hydraulic fracturing techniques.

Operating on the basis that there is a good community and government appetite for new coal mines, and that coking coal opportunities in Britain must remain because of the new higher-priced environment, New Age went looking. It came across the virginal Lochinvar deposit that straddles the English-Scottish border, not far from the runaway wedding village of Gretna Green. Partly drilled up years ago by the now defunct National Coal Board, Lochinvar has been over-looked until New Age came along. It secured a licence over the deposit from the Coal Authority, which replaced the NCB, for the princely price of $20,000 and did some of its own drilling to confirm the potential indicated by the NCB's original work.

It has been money well spent as New Age's independent mining consultancy Palaris recently estimated an initial stock exchange compliant inferred resource estimate for Lochinvar of 112 million tonnes of coking coal in three seams on the Scottish side of the licence area where the coal seams are shallower.

Because New Age last traded at 5.5c for a market capitalisation of $14.2 million, and because it was holding about $4m in cash at last count, it is safe to assume that there could be a lot of interest in the company-making potential of Lochinvar. New Age's peers with similar-sized coking coal resources in places such as Canada, the US and Indonesia trade in a $45m-$90m range.

New Age has some work to do before the market is going to award it the same sort of valuation metrics that its peers command. But there is little doubt that Lochinvar has the potential to become the first significant underground coal mine development in Britain in the past 30 years or so. New Age hasn't said so, but it would seem that a $200m development producing 1-3 million tonnes of coking coal annually would be what its early scoping of a development would be considering.

Because of easy access to infrastructure and low labour costs, Lochinvar could probably produce its coking coal at a competitive $US70 a tonne, or thereabouts. As mentioned earlier, seaborne coking coal prices have recovered to more than $US150 a tonne. That is for the top-quality stuff from Australia. Lochinvar would probably fetch about 80 per cent of the premium price. But Lochinvar coal won't have to travel more than 20,000km (rail and ship) to be fed in to a blast furnace like Australian coal does. It will have to be loaded on to the open-access railway network, but even assuming about $US15 a tonne for freight, Lochinvar coal does look to have the potential to generate nice margins at current coking coal prices.

Part of the attractiveness of the Lochinvar opportunity is the lower-cost base, as well as the more attractive fiscal regime. An underground miner over there earns about $US52,000 annually compared with the $US88,000-$US153,000 on offer in the Queensland and NSW coalfields. Then there is the lower corporate tax rate (20 per cent from April 2015 versus 30 per cent) and lower royalties (18 pence a tonne compared with Australia's 7-15 per cent slug on the value of the coal).