"Production should start Q4 this year and ramp up to approx 5mtpa in 3 - 4 years. They will produce high quality coking coal which should sell for $300 tonne ( conservatively after the recent floods ) at a cost price of around $100 per tonne ."
Could you source this 5mtpa figure, please. All the company presentations and the Lodge partners suggest initially 1mtpa, by 2013, then ramping up to 2mtpa by FY 2015. The DFS only included Escarpment and deep Creek but the whole Buller project has a JORC compliant resource of 47.1mt. They have a conceptual exploration target for the Buller project pf 60-90 mt. they expect 80% conversion of the current resource to reserves and 20% of the exploration target. This totals 46mt resource, with a 75% yield, this gives 35Mt of product. If it was somehow ramped up to 5Mtpa that would mean the Buller project would have a life of 7 years. An ultimate target of 4Mtpa is mentioned , but beyond 2015, assuming they find the coal. Also you cant use a p/e on gross profit, the "e" is NPAT. Roughly by 2015 we could see net margins of about $120/ton (maybe a lot higher, maybe not), or about $168m, npat or 25cps... I suspect $1.20-$1.50 would be reasonable nearer production. The big worry not is the greenies, and a rare kiwi, and some endangered snail!!!
BTU Price at posting:
88.5¢ Sentiment: LT Buy Disclosure: Held
