Someone asked me to have a look at TVN so I'll summarise what I reckon in a few points...
1. Ash content is great. The lower it is, the less benefication that is required. Ideally you want it to be under 15% for export grade thermal coal, so 11% gets a tick from me.
2. Thick seams. Goes without saying; the thicker, the better, and 115m in one hit is great.
3. The 115m seam is at a dip angle of 20*-30* and is being struck from a depth of about 184m. You're probably looking at some form of bord and pillar mining convention with this seam, or they could get lucky and develop a surface strip mine provided the strip ratio is economical.
4. Sure, the calorifc value of 17MJ/kg on an air dried basis seems quite low, but you have to remember that this is in-situ coal with no benefication. A bit of crushing and washing will send the calorific value past the 20MJ/kg mark quite quickly. Whether they can economically kick the CV up to ~25MJ/kg to meet export grade requirements, however, is another question. TTC has a fair right to be concerned about this aspect of the results. When interpretting CV in coal logs, you are best going with the ADB rather than the DB or DAF because you have to consider what the company will be mining and putting into the processing plant. The DB/DAF results demonstrate what TVN could potentially be working with, but you won't know for certain until wash/crush testing is conducted.
To summarise, whether or not TVN have a winner here will really come down to the economies of benefication. They've ticked all the boxes except the main one, and that is the calorific value. That said, I can't really understand why there is so much panic by a few people here. African and Asian coal is not the same as Australian coal, and you have to set the expectation bar a bit lower with these things. 17MJ/kg raw in-situ coal is in the ballpark for what is considered 'decent' out of these areas, so I wouldn't be rushing for the sell button just yet, especially given that TVN's market cap is still quite low!
Hope that helps :)
TVN Price at posting:
6.8¢ Sentiment: None Disclosure: Not Held
