Thanks for the message zx65.See, I think there is a unanimous...

Thanks for the message zx65.

See, I think there is a unanimous acceptance that the coal isn't of the best quality (even the tone in the CEO's letter suggests this with his avoidance of the word 'export'), but where the opinions divide is whether or not the coal can be produced economically and in a profitable manner. Unfortunately, the email from the director does nothing to alleviate these concerns. You will notice how he states the wash testing will be conducted at a later date, after a JORC resource is defined. There is no doubt in my eyes that the resource will be sizeable, but it looks like the market will be waiting for a while yet to see just how much potential this prospect actually has because that wash testing really is the 'make or break'.

Sure, this prospect might have a better chance than some of its neighbouring peers, but the CEO is making a comparison between this prospect and something that isn't marketable, so he isn't neccessarily stating that TVN's coal is great by any means. Rather, he is really just saying that it is less 'worse'.

I suspect that the coal will be in some way marketable on a domestic front purely because how strongly they are pressing the exploration campaign, but let me postulate on psi's numbers above for a minute. Psi reckons they will make similar margins to some of the domestic South African coalies, which ranges from $7/t to $12/t.

If you have a look at the operational profit that the likes of CCC makes out of their domestic sales, it really isn't that much. TVN would need to prove feasible a project in the vacinity of 2-2.5 MTpa+ for it to be a real mover in the long term; and this is far easier said than done. There will be a few years of feasibility studies and development ahead before they begin to get the cash rolling in.

One way to gauge if its worthwhile to stick around is this: have a think about cashflow figures and where TVN's market cap would move to in, say, 3 years time if it does become a producer.

Anyways, I'll leave it at that. I've gone of on enough of a tangent as it is lol...