Target $18.72, page-6852

I reckon the mines could trundle along as they are for years. Almost anyone could run them. The cost of extraction and sale price here is critical... also, the depreciating assets in an inflationary environment changes dynamics of basic FCF analysis, so, getting the numbers right is important or the payback times could blow out.

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Daunia as a going concern probably won't see increased tonnes and it'll just mine until it's exhausted. The depreciation of assets and cost of maintaining it is a relative unknown to the market. The truck fleet is ten years old... when are they end of life? What's the capital spend to replace a fleet? Sure WHC could run it, but, the cost of new gear? The main prize I see at Daunia is the railing contract.

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I see Blackwater as the biggest prize. It could be improved with regards to tonnes. Could WHC do this? Yes. Although, I would expect it to take ten years minimum. Would it be easy. No. In brief it would involve breaking the site into a number of smaller independent mines which for the most part wouldn't interact with each other. This is quite different to the BMA approach which was to standardise much of the organisation into a monolithic beast. The hardest part of doing this would be building the team with the right people to "hive off" and "rebirth" currently operating pits at Blackwater. The next hardest part would be to tolerate a production loss of around 25% for the whole site while this occurs. Does WHC currently have these people ready to go? Probably not. Can WHC afford a 25% loss? That depends on the purchase price and major contracts for earth moving.