RE: Question about jv breakdownThat's a good question - what happens with CEC's Joint Venture partners?
Some comments:
The two Asian trading companies put $11.25 million into the joint venture. I don't think Compliance put anything into the JV. I don't think CEC has any money to put into anything. So the Comox Joint Venture is running on the partners' money right now.
The money completed the acquisition of the West Fraser coal holdings, paid for the 2009 drilling, is funding the environmental assessment process, and the feasibility study.
The feasibility study will make or break the joint venture. If it says the coal is good enough quality, and there's a market for it, the joint venture will stay together. Or it could say get real, this is just thermal coal, same as Quinsam is producing, and there's no market for it. In that case, the JV partners will be gone.
Consultants don't like to deliver bad news, but they usually won't lie, either, so most likely it'll say this is a marginal proposition - low grade coking coal at best, and only marketable at today's screaming high prices for metallurgical coal. Should coal prices retreat back to more normal territory, though goodness knows what that is anymore, the Raven project may prove unviable. What will the joint venture partners do in this case? Walk, I think. They're not short term opportunists, they're long term strategic players.
But nobody knows at this stage.
The assays are showing coal which is thermal, but for a few things, such as unexpectedly high free swelling index measures. For the company to keep pitching it as coking coal is wishful thinking. Perhaps they believe if they say it often enough, it will come true. Repeat with me: "My lead is gold, my lead is gold, my lead is gold..."
Question: does Compliance have any money to put into the Raven project? If not, what happens when they've burned through the partners' money? Would they issue new shares? Would anyone buy them?