Depends what you think the story is.Supplying thermal coal to...

Depends what you think the story is.

Supplying thermal coal to the SA power authority seems like a no brainer.

risks are 1) the company is not able to secure finance against a BFS to do so, or (2) the price of coal tanks so badly that the project becomes uneconomic.

All the other usual risks such as defining an economic resource, access to infrastructure and offtake agrements have already been ticked.

I reckon 1) is a much greater probability than 2). the demand for thermal coal is much less elastic than coking coal and other commodities. thermal coal is energy, not materials. driving a car is a luxury. having lights and a fridge much less so.

As for 1) we have an unusual safeguard in that the two directors have to pony up $30mil in order to exercise options before 2010, which is a significant amount of money. As long as the SP recovers to around the 20c mark by the time the current cash balance is exhausted by completing the BFS, then RES wont go broke.

So yeah, I believe it. whats happened to the RES SP is no more or less than has happened to every other junior/specualtive stock on the market right now.