To develop a coal mine is an expensive project and the potential yield has to be sufficient for the developer to recoup costs within the medium term of the mine.
This is particularly so with coal being branded a 'dirty' fuel source and in this instance with such a high ash content, MNM is looking at steaming coal at best. This shouldn't be confused with high grade/low ash coking coal that commands a premium price on the spot market and is presently being eagerly sought by Chinese consumers.
Ignoring the quality of the coal for one moment, the seam thicknesses are certainly attractive from the perspective of a longwall operation but the depth of each seam will create logistical difficulties for extraction. Not impossible, but difficult and hence add significantly to the production cost per tonne.
From my involvement in the coal industry, I would suggest that there are many more viable deposits that are easier to extract and potentially yield a higher quality product with lower production costs than this potential mine, particularly in the Surat Basin located in Qld.
Not intenting to rain on anybodies parade, but I'd suggest that there's a lot of hype about this project without sufficient substance.
Rgds,
MNM Price at posting:
0.0¢ Sentiment: None Disclosure: Not Held
