thoughts on a capital raising price, page-5

That burn rate was due to acquisitions and infrastructure costs. This has all been paid for now. So the costs that the company is will be experiencing with be operating expenditure and corporate costs unless there are some more acquisitions. If there are no more acquisitions then we should see the money in the kitty start to rise from the sales.

I was just doing some numbers the other day taken from the announcement and the quarterly and it makes interesting reading.

I think they said mining costs at MCM were around $55 per tonne and at GPK $25 per tonne. Say it costs $25 to ship it to China from the mineand they are using a blend of say 1 mcm to 3 gpk to come up with the thermal blend that most powerstations use in SOuthern China of around 5500Kcal

Say they are using the high sulphur coal at MCM to blend with the low rank coal of GPK leaving the low sulphur coal to sell to steel mills then this would maximise the values of their coal.

So if we do a rough back of the envelope calculation.
1 MCM = $55
3GPK = $75

Rough costs are $32.5 per tonne + $25 to ship it to china plus costs

This equals around $57.50 average costs. Now I think at the moment they are getting around US$80 per tonne for the coal in CHina. Let say there is another $10 per tonne costs that I do not know about they are still making $12 per tonne + and I think I am being pretty hard on the cost side of things.

So say they do 100,000 tonne per month that is still $1,200,000 per month profit. And you have to remember the first 3 shipments the actual profit will be a lot more as we inherited the stockpile of MCM coal so there are no mining costs really for that coal. That is the bonus. Then if they sell one shipment per month of low sulphur mcm coal which is the majority of the coal they will be able to sell this to the steel mills for around $110 per tonne giving a $30 per tonne profit margin. That is another $1,500,000 profit per month.

So worst case scenario they should be doing around $2,700,000 profit per month within the next 4 months. That is my take on the ball game anyway.

Time will tell.