Bathurst Resources - BRL

[BlackPeter]

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.

Not nowhere near NZD200/ton? OK - lets see. The Chinese market values coking coal at the moment at 910 RMB - check out: http://www.sunsirs.com/uk/prodetail-417.html
1 Chinese yuan (aka RMB) equals (as we speak) 0.21 NZD - i.e. the ton of coking coal sold today is worth NZD 191.10; Admitted - not exactly NZD 200, but given that the current price is a historic low (in RMB, not in NZD), did I thought we can assume over the next 20 years from time to time a slight lift in the coking coal price.

If we assume that the coking coal price will stay (in average) over the next 20 years where it is today (i.e. $191.10), than (according to my spreadsheet) the share would be worth 9 cents (assuming my other assumptions are correct).

cheers ....

[blackcap]

Not nowhere near NZD200/ton? OK - lets see. The Chinese market values coking coal at the moment at 910 RMB - check out: http://www.sunsirs.com/uk/prodetail-417.html
1 Chinese yuan (aka RMB) equals (as we speak) 0.21 NZD - i.e. the ton of coking coal sold today is worth NZD 191.10; Admitted - not exactly NZD 200, but given that the current price is a historic low (in RMB, not in NZD), did I thought we can assume over the next 20 years from time to time a slight lift in the coking coal price.

If we assume that the coking coal price will stay (in average) over the next 20 years where it is today (i.e. $191.10), than (according to my spreadsheet) the share would be worth 9 cents (assuming my other assumptions are correct).

cheers ....

Thanks for that BlackPeter... I am unsure as to the validity of BRL as an investment... but if what you say is correct then the market is discounting the "managerial abilities" of BRL in a big way. Because from 3 cents to 9 cents that is a huge premium. Maybe the market is not convinced about the "production costs" that BRL are expounding. And in a way the market is right to be wary as till now they have not had great success... granted its the coal price that has thwarted them. You may be onto a winner here.

[BlackPeter]

jeez with valuations from you like this when compared to current share price we don't need MAC on the threads anymore.........or are you MAC.
not sure if you would consider my comments construtive

Hi Snaps - no, I am not MAC - and though I often appreciate his/her contributions, I don't always agree with him/her.

And in terms of constructive ... instead of making somewhat funny remarks it would really help if you could point to an oversight or mistake in my assumptions (praise is o.k. as well ...), like - did I forget some additional cost? Is the transport from the mine to the ship more expensive than I assumed? Do you have any indication that the coal production numbers as published in the latest BRL investor report are too optimistic or that the coal might run out earlier than BRL states (20 years at the stated 3Mt pa) ? Do you have an indication that the coking coal price is more likely to further fall than rise again? Actually - the latest point obviously could be the fly in the ointment. As you can see - I calculated the SP value as well for the current (really low) coking coal price of NZD 191.10 - reducing the share value to 9 cents. If coking coal drops much further and does not recover for the next 20 years, than there is not a lot of fat left - hence the risk premium (16% return) in the DCF.

No offence intended ....

[tony64peter]

The current market price for FOB is around US$105, NZ$140.

[BlackPeter]

The current market price for FOB is around US$105, NZ$140.

market price where? and are you looking at metallurgical coal? The Chinese coking coal index (910 RMB) I referred to should be good for China (obviously) and most of Asia (i.e. BRLs targeted export market). Not sure about other parts of the world (though ocean freight is quite reasonable, i.e. I don't expect huge differences)?

[tony64peter]

From the graph you will see that the Jan2015 FOB sale for Aus Hard coking coal was US $106.90. Panamax shipping rates are currently around US$22/ton. I don't know what the Sunsir's price refers to, could be a delivered price.

http://www.kitco.com/news/2015-01-28...5-in-2015.html

[Daytr]

Why are you using an RMB coal price to calculate back? You just use the USD price which is currently $117/ton.
I would hope that transport costs etc are no where near NZD70/ton otherwise it will never be competitive.
I just read a report downgrading the price outlook for coking coal & that production costs globally will reduce & this makes sense considering the price environment & reduction in fuel costs.
Is Hamish still running things? I used to know him from his gold days in Oz.
Good bloke.

[tony64peter]

I am fairly sure the sunsir charts are in chinese $ and the kitco chart you are refering to is USD.........

Correct. The current, Free On Board the ship US$105 Australia [latest sale] plus shipping,ie US$127/ton to China, is different from RMB910/6.25 = US$146/ton. I assume the Sunsirs price includes delivery costs at the Chinese end.

[BlackPeter]

From the graph you will see that the Jan2015 FOB sale for Aus Hard coking coal was US $106.90. Panamax shipping rates are currently around US$22/ton. I don't know what the Sunsir's price refers to, could be a delivered price.

http://www.kitco.com/news/2015-01-28...5-in-2015.html

Interesting. Anybody else out there who could help us to align (or explain the difference) between the quoted Sunsir rates and the Haywood predictions?

[tony64peter]

2009 oil was US$70-75/barrel and from 2009 Gotv economic report rail costs were NZ$35-40/ton to rail to Lyttleton from the Coast.
Nov 2011, BRL, AGM presentation logistics costs were forecast at US$30/ton.
Today oil is US$51.16, I'm guessing that the US$30/ton would be close to the mark given inflation and the available rail capacity on the line with the SE down turn and PRC's closure. The use of New Plymouth I understand was a rail capacity issue created by PRC/SE, rather than cost initiative so this may be the preferred freight option now. With load out costings both ends on top, I doubt that production will commence until FOB prices are around US$130.