Acquisitions?, page-24

I thought I would put in a quick update, I think my initial ROI and cost estimates were a bit off. They would need a lower than $60AUD cost per tonne for this purchase to be worthwhile due to needing a return which will also cover the initial investment over the mine life. However after reviewing Rios and Wesfarmers accounts I believe that the cost for this mine will be well below that, maybe around the $30-40 AUD per tonne, or possibly even better. I also think we're getting very close to a turning point for thermal coal prices due to mine closures (next 6 months would be my estimate). The resistance to new coal mines could cause a big spike in thermal coal prices a few years down the track.

In my opinion this will be a great asset for nhc, in 5 years it will look like they were geniuses. I wonder if the other JV partners would consider selling their stakes in the mine on similar terms? I doubt they would be in a position to match the nhc bid to veto. Once they have taken over Rios share and have it running smoothly buying one of the other JV partners share of the mine would be a good use of their balance sheet capacity so that they can focus on one mine and running it as profitably as possible.