pandelis

Hi - I've got many reasons for choosing CEY as a L/T investment. I guess in a bullet form is appropriate.

The investment theme for baseload energy is based on the reality that for the next 50 years at least we only have two choices; coal and uranium.

People can reduce all kinds of consumption (even food for that matter!) but demand for electricity is more inelastic and a direct function of population growth. Even in tough times, a household will prioritise to keep the lights on.

Coal is currently copping a beating on the world commodities market, but this is unfounded, especially in regards to thermal (energy) coal - Centennial have themselves reported a dislocation between perception and reality of demand.

Despite the global economic turmoil, Centennial continues to experience strong demand for its coal.

"While the coal industry cannot be immune from the current financial turmoil affecting world markets and any
consequent economic slow down, it is important to note that the fundamentals of energy coal are different to
metallurgical coals. Metallurgical coals are used almost entirely by the steel industry, while more than 80% of
thermal coal is used for electricity generation.
It is our experience that coal buyers, in their assessment of coal market fundamentals; consider the issue of supply
security to be paramount. Recent discussions with key customers continue to confirm this view.

From a Centennial perspective, the Company continues to receive enquiries for coal to be shipped via Port Kembla,
with many of these enquiries seeking additional coal over and above already contracted levels as buyers seek to
ensure security of supply.

As a preferred independent supplier, shipping through Port Kembla, we remain confident that any economic slow-
down will have a limited effect on forecast export sales.

Given our geographical proximity to the State’s electricity generators, we remain the largest supplier of thermal coal to the domestic power market from a suite of mines uniquely placed to serve the State’s growing energy needs. As these domestic contracts expire, they are likely to be replaced with a new generation of domestic contracts – providing a regular low-risk cash flow stream and free from the vagaries of the Australian dollar / US dollar exchange rate."

Other reasons for choosing Centennial.

1) Great debt profile. No $US debt. Gearing reduced to 17.5%.

2) Stable earnings base. ~70% of output is destined for local generation. These contracts are extremely safe and underpin the companies earnings. It is worth mentioning here that exports are also destined for blue chip energy producers in the Asia-Pacific region for whom security of energy supply is paramount. CEY is well and all mines are cost competitive.

3) Increasing Focus on Exports: Centennial has increased like-for-like exports by 22% over the last period to an annualised rate of ~3.5mtpa and growing. It is incredible how much focus is placed on other companies who are 100% export driven (MCC/FLX/GCL), yet Centennial is already exporting more than GCL, has nearly matched output with MCC and is catching up to Felix.

4) HUGE coal resources and output. Centennial has massive reserves of high quality coal product and continues to increase output every year - this year achieving a record raw production of 20.5 million tonnes making it Australias largest independent coal producer by a huge margin.

5) More high quality, low cost mines coming online in the future, i.e. Airly (1.8mtpa) and then Awaba East (4mtpa).

6) This is the most important point for me. Uninterrupted dividend stream since 1994. Currently at 10% + yield per annum. This years dividend was 21 cents fully franked. There is no reason to believe Centennial cannot continue to sustain this yield into 2009 and beyond.

Have to get moving now, but that's a start.

What are your thoughts?