volume, page-13

firstly check your figures

the 6600kcal per TONNE figure TVN quote is for dry ash free.This is signficantly different than the basis for which coal prices are tradeed on.


http://www.southgobi.com/i/pdf/sgq-presentation.pdf
Check slide 10. South Gobi is getting $60/t for their COKING COAL at the mongolian border. Seaborne prices for coking coal are $250-300/t right now. See where I'm going?

The thermal coal seaborne price is irrelevant at $120/t. For starters this is for Newcastle coal with energy of ~6000kcal AIR DRY basis. This is important because TVN is not 6600 adb it is ~4100 adb so right away this means TVNs price is not $120 but $80/t. Which sounds good but now look at my point above regarding seaborne coal. TVN will see a huge discount on this price at the border. Plus some as the discount for low CV coals is not linear (look at Indo coal prices)

Lastly read this
www.southgobi.com/i/pdf/ProspectusEnglish.pdf
Pages 55 onwards have heaps of good info on China's coal industry.

The area this coal is moving into is not short on thermal coal. Inner Mongolia is the Saudi Arabia of thermal coal. Then add this all the thermal coal that will come out of Mongolian coking coal mines (where they just want to get rid of it as it is essentially a crappy by product).

Seaborne prices are for stuff hitting the coast not inland. TVN coal at the Inner Mongolian border is like selling snow (not especially good snow) to eskimos. And it is not high quality enough to warrant the cost of shipping it 100's of kms in China to get to markets short on thermal coal.

i know it seems like im bashing this stock and its true i dont hold. but i'd like to think some people here will find this info useful. hey check it out and maybe you still want to buy in. just don't do it thinking you are looking at huge margins on the coal