News: Anglo American to sell interest in Australian coal mine, page-27

Not sure if Anglo would have sold the mine if it was one of the lowest cash cost mines in the world and only needed $15-$25m to convert to open pit and get into production with 5mt. I would think the all in cash costs are quite a bit more and capex is significantly more than that (but need more information to determine).

In my view thermal coal prices will need to rally quite a lot to get this to work.

However, given a significant number of current coal mines are currently loss making, I think there is a good chance coal prices will rally in the medium term.

To me, this is a punt on a recovery in coal prices with a guy who has been a proven money maker in the past.

But if coal prices don't rally then I think it is highly unlikely this mine works.

WHC has a market cap of c.$700m (this is with mines in production, after significant sunk capex, significant resource and good quality thermal and semi soft coking coal) and I would guess that if you added virtually all the coal juniors listed on the ASX (most of which have market caps of $10-40m) then you will get less than $500m.

Plus to get the current market cap you need to deduct the capex, use an NPV given production is unlikely until 2019/2020 (best case) and then add a significant discount for the risk around coal prices, permitting, timing, capital requirement etc.

But all that said, still think it is a reasonable punt at current levels in a very unloved sector -> BUY.