Cline Mining Corporation T.CMK

Costs

[mr1derful]

It's interesting to look at Walter Energy and their costs. Last quarter their US mines produced 2.0 million tons of HCC at a cost of $110/ton. The quarter before they produced only 1.5 million ton from their US operations and their costs were $118/ton. The reason costs were lower per ton this quarter was primarily due to  higher production where fixed costs could be spread over more tons. WLT also produces top quality hard coking coal and they consistently achieve benchmark pricing.

Now you tell me how is Cline going to achieve costs of under a $100 per ton as per the technical report? The only way that I see costs that low is if they produce a bunch of thermal coal which is cheaper to produce but also doesn't fetch HCC pricing. One final point. Walter is developing Willow Creek in BC which is an asset that they acquired when WLT purchased Western Coal. That project is in the start up phase and they produced 120,000 tons of PCI last quarter. Their costs...$448/ton. Not a typo. The quarter before Willow Creek produced 155,000 tons and their cost was still an astronomical $216/ton. WLT has the luxury that they produce cash flow their other mines so they can afford to subsidize Willow Creek until their production levels reach profitable levels. How is Cline going to subsidize their assets until they produce meaningful cash flow? Do they even have enough cash on their balance sheet to fund operations? Nobody really knows because the last financial report was for the November 30,2011 quarter.

[ckstar83]

no offense, mr.1derful, but in terms of their opex i would rather take their advice on their costs base on technical report in may 2011 from a (company that does it for a living) rather than a poster, granted costs could be rising, but i'd still take their expertise over yours. just my opinion.

[mr1derful]

A dose of skepticism can be very healthy. Anybody can input numbers into a spreadsheet strictly based on assumptions. I wish life in the mining business were that simple. My skepticism comes from the difficulty that established coal producers like WLT, BTU, TCK have in meeting targeted production and costs. There are so many curve balls that get thrown at companies in this business. I

[ckstar83]

i agree, sketpicism is healthy, but its another to insult these professionals with "anybody can put numbers into a spreadsheet"........that's pretty insulting to a consultant,  

[ark88]

I keep seeing your posts here saying pretty much the same thing and I keep scratching my head trying to understand what it is that you are trying to say, beyond the obvious "garbage in, garbage out". Yes?

[ckstar83]

by the way, im trying to find miner's salaries, but i believe tk mining had postings for miners with starting wages at 32.50 and up, i think miner's wages in canada are higher, even higher in austrailia.... trying to find some info on this though, dont quote me yet.

[mr1derful]

I'm not insulting the consultants. They are trying to make an educated forecast. The point I'm making is that real life in the mining business can throw those numbers out of whack real quick. Just look at the projections they made for Cline's production in 2012 and 2013. I'll bet you a dollar that CMK doesn't make those production numbers. It doesn't take much too throw the

[ark88]

I posted a number here using an average of $60K per annum salary. I think that may be a bit on the low side but close enough. The key point in calculating the total cost of salaries is the multiple that one uses. I had mentioned 1.5-2 multiple on top of the salary. In Canada, I would use the 2.0 multiple. Not sure about the states. In short, based on 350 employees, I had come up with at least $3.5

[mr1derful]

Ark88. Keep sctratching your head. You'll figure it out one day. After all you have extensive experience operating a mine.

[ark88]

mr1derful, I happen to be a 'consultant', a member of one of the 7 professions. I have my own firm located in dowtown Toronto. What may I ask is your background?

[mr1derful]

So Ark88 you are a Big Shot yet you have time to post on Stockhouse. I figured you are a Toronto guy as you have referenced in the past how you have seen some of the older management memebers of Cline in your hood. Hence your theory that they will eventually sell the company. Me...I am just a humble Sandwhich Artist.

[ark88]

mr1derful, for the record, I believe I was polite in all my resposes to you. I asked you whether you had any money in CMK and if you did not, then you should leave this board, and yet, you continue posting the same thing over and over. We get your point.

[miner8740]

talk to the old miners wh worked them seams you will appreciate then on what cmk may be going through give them another 8 to 10 months and things may change