Potential Daunia Aquisition, page-2

"assume 4.8mt annual production and total costs of $105/t"

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This is the big unknown. Do a sensitivity analysis on cost/t. Every $225/t from $100/t up to $225/t.

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The recent CRN report put cost of coal there at 170-180/t with the assumption that USA mines are efficient compared to Australian operations with 100/t. It's well known that Australian coal mine practices are amongst the most inefficient and costly in the world. Curragh/Blackwater are classic examples of this inefficiency.

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Recent bluff numbers from BCB were 224/t "at the mine gate"... does not include rail/port costs. Bluff is a structurally complex deposit, the same as Daunia. So the geological challenges for operations at Daunia are real...

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Staffing. It's well known that bhp operations are over staffed. I hear that Daunia employs the same number of people per tonne as other mines... didn't they tell us that a robotic autonomous haulage fleet would reduce costs by employing less people? Apparently not.... Apparently it takes a who lot more highly skilled, highly paid and difficult to replace "tech bros" to run the mine, whereas every other mine uses easy to replace bone heads.

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Without an official number from BHP, I'd estimate $180/t FOB costs myself. I was on a BMA site in 2016 where we were doing $80/t costs at best and the AUD was 15% higher than today, so maybe it was $90/t in today's money? It like working in a ghost town compared to today's operations. Everything was breaking and it was difficult to get things fixed unless the coal stopped flowing.

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Also worth considering the SSCC/HCC/PCI/thermal splits. Not all met coal is created equal. Daunia has low fluidity coal as a general rule of thumb and this means that it doesn't produce HCC, which is where the actual money is in met. The sale of all these BMA mines which produce SSCC/PCI is likely to shift pricing in the market... we already see this with PCI being priced as thermal products based on calorific values. The SSCC is valuable, but, consider that steel mills want 400-600 ddpm and the mines being sold are lucky to produce 200ddpm... The SSCC needs to be blended up with HCC from other bma mines which come in at an average of 2500ddpm and often has spot samples of over 6000ddpm. It's a simple weight average to work out that BHPs selling their poor mines and will screw over the buyers because the buyers will need to blend up while BMA can pick and choose who to blend down with. This isnt an overly complex concept, but, it's generally overlooked by 99.9% of market investors... and it's possibly the most important concept in this sale... because future high prices for SSCC can not be assumed to be the same as historical prices.

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Hows that for being on topic?