Bathurst Resources - BRL

[blockhead]

Bit of rustling among the leaves on both sides of the Tasman today, a wee stirring of interest maybe ??

[BlackPeter]

Bit of rustling among the leaves on both sides of the Tasman today, a wee stirring of interest maybe ??

Yep - interesting ground swell - and much more buyers than sellers now on both sides of the ditch, despite slightly retracting coking coal prices (well, retracting in RMB / USD ... obviously given the falling AUD / NZD the balance looks still favourable over here).

Notice as well other Steel / coal suppliers rising (e.g. BHL, though they mine as well oil and other metals)

Maybe the tide is turning after all?

Discl: hold (both BRL and BHL)

[BFG]

Yep - interesting ground swell - and much more buyers than sellers now on both sides of the ditch, despite slightly retracting coking coal prices (well, retracting in RMB / USD ... obviously given the falling AUD / NZD the balance looks still favourable over here).

Notice as well other Steel / coal suppliers rising (e.g. BHL, though they mine as well oil and other metals)

Maybe the tide is turning after all?

Discl: hold (both BRL and BHL)

Not to rain on the parade but this may be due to the recent oil and general commodities rebound on China QE speculation. I wouldn't be holding my breath if CC is linked to oil price as I'm still very bearish on that front...

[tony64peter]

In the BRL company update Sept 2014 they stated, "2014 Mine production cash costs- Av. range NZ$75- 85/t ex mine."
In the latest efficiency report they stated, " ...to under NZ$115/t mined."
I'm a little confused here and have asked the question but BRL never reply to emails.

Can anyone enlighten me where I have erred, ie its more expensive to mine after efficiencies are put in place?
Thanks

[BlackPeter]

In the BRL company update Sept 2014 they stated, "2014 Mine production cash costs- Av. range NZ$75- 85/t ex mine."
In the latest efficiency report they stated, " ...to under NZ$115/t mined."
I'm a little confused here and have asked the question but BRL never reply to emails.

Can anyone enlighten me where I have erred, ie its more expensive to mine after efficiencies are put in place?
Thanks

Well spotted & good question. Potentially it is the difference between break even (just counting cost of sales) and sustainable operation (including overheads). However - why don't you just give them a call? They are here to help:

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[tony64peter]

Well spotted & good question. Potentially it is the difference between break even (just counting cost of sales) and sustainable operation (including overheads). However - why don't you just give them a call? They are here to help:


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Thanks, On your suggestion I did call and it is as you have stated. Cheers

[BlackPeter]

Thanks, On your suggestion I did call and it is as you have stated. Cheers

Thanks for the feedback ... and good to hear that they attend to the phone .

[tony64peter]

Lets hope Met coal follows the lead.
http://www.mining.com/coal-price-ral...s-china-22896/

[BlackPeter]

Looks like a nice upwards trend emerging ... and I thought it might be a good idea to establish what the shares might be worth.

So - I took my good old DCF spreadsheet and used the following assumptions:

* production figures as per BRL's latest investor presentation (404 kt in 2015, ramping up to 3Mt in 2020)
* production cost per ton coking coal mined: NZD 115 (as pre the recent "efficiency" report);
* transport and handling to get the coal on ship: NZD 70/ton (this is my weakest data point - I think I remember this number from an old PRC
prospectus, but couldn't find any actual data - any hints appreciated)
* 2 percent annual inflation
* sell price: assuming 3 scenarios: low (NZD200/ton) - medium (NZD250/ton) and high (NZD300/ton).
At this stage the coking coal price is very low - slightly below NZD200)
* given the high risk requesting a return of 16% annually.

OK - and the result?

My BRL share is worth
$0.22 (assuming a long term average coal price of NZD 200 / ton - unlikely)
$0.95 (assuming a long term average coal price of NZD 250 / ton - likely) and
$1.68 (assuming a long term average coal price of NZD 300 / ton - unlikely)

Not bad for a share which is currently available for 3.7 cents ... unless I made some wrong assumptions.

Any constructive comments appreciated ...

Discl: holding (some) - consider owner bias and DYOR

[blackcap]

Yep... I think you may have some wrong assumptions sorry mate. The best predictor of future coal price is the price now... (finance 101) and that is nowhere near NZD200/ton

Don't get me wrong... I am tempted to dip my wick in right now as well so to speak.