I posted some numbers back in late July as to my rough valuation...

I posted some numbers back in late July as to my rough valuation metrics of BTU, I have revised those numbers in light of additional information. Very simply I consider the BTU case compelling and it adds perspective.

Amended numbers etc as follows:

The way I look at it is as follows:
1) The pests will have been removed in the next six months so that BTU can commence operations.
2) Production in the next few years will hit 2 million tonnes.
3) Cost of production will be about $115 for the first 2 years, dropping eventually to about $85 after year 3 as the conveyor replaces trucking and production is ramped up. Over a 10 year mine life that is an average cost of about $91.
4)Current prices are about $160 (17 Nov 2012), and BTU receives a margin of 5 to 15% on top of this for its product. At an average premiun of 10% that gives a price of 160 plus 16=176.
5) BTU has about 750M shares on issue.

So if I assume the worst, say the price received is 160/tonne ie putting a premium on the BTU product of 0%. If I also assume that costs are 10% higher than the average cost of $91, say $100.

My rough metrics are that profitability is 2m (tonnes) x(160-100)=$120M. Now with 750M shares that is 16 cents per share.

Using these rough numbers, at a share price of say 30 cents that equates to a PE of about 1.9 or at a price of 50 cents 3.2.

Now if you added in another $25M of costs for luck (say 250 birdie inspectors at $100k each), that still gives me a earnings of about 12.8cps, a PE 2.4 at 30 cents or 3.9 at 50 cents.

Lets just ignore the fact it is a premium product and to a certain extent is shielded from market downturns. Also ignore that they are producing, cashed up with virtually no borrowings and minimal sovereign risk with a supportive community and government located in an area that needs all the revenue it can raise. IMO these numbers speak for themselves.

Yes there is a risk that the birdies may win a legal round, but for reasons that have been stated here previously I do not consider this a major issue in the risk/reward equation.

I know these numbers are rough however IMO they put it in perspective and of course do not take account of economies etc when production ramps up.

Cheers and DYOR