In July 2010 when the thermal coal price was around $100 Kepco...

In July 2010 when the thermal coal price was around $100 Kepco purchased from Anglo American the Bylong undeveloped underground/open-cut coal deposit (NSW) for $403 million.

The Bylong deposit which Kepco purchased just over 2 years ago had a total resource of 420Mt (150Mt indicated and 273Mt inferred). I don't believe this resource has changed but I could be wrong.

Cockatoo has a 3 year call option to purchase 30% of the project for an amount most likely around it's current market capitalisation. Call option expires in December 2013.

Sure there are CAPEX challenges for all coal developers and miners but if someone like Kepco is willing to pay $403 million for an undeveloped coal deposit I would like to believe that CAPEX will not be an issue in future rather the timing.

Cockatoo also purchased interests in a number of undeveloped coal deposits with existing shareholders Kepco and POSCO for over $170 million.

Then there is all the other undeveloped coal deposits and an operating coal mine at Baralaba. Clearly CAPEX and debt in this current climate is not viewed favourably by investors couple with a low 2012 coal price (thermal, PCI and coking)

I still find it quite amazing the current valuations the market places on undeveloped coal deposits as well as operating coal mines today compared to July 2010 when all coal coal prices were only about 10 to 15% higher than today's spot price.

Surely all these recent mine closures will eventually reduce supply and lower future labour costs as workers realise that a lower paid job is better than none.