Anglo wants 212/tonne for this quarter.Nippon Steel settles at 200 with peabody, Chinese selling the coal out of their stock piles for now but that will come to an end. My logic says this
1. Coking coal is rare compared to iron ore or thermal coal- we are 75% coking.
2. The chinese spent a lot of money on coking coal projects in the run up to 2012.
3. The chinese have some coking coal but are(were) pounding it out at low prices in order to stay alive but are quickly running out of it.
4. The chinese gov't by shutting down smaller more destructive mines has made the price go up and can make it go down if it wants, but why sell all Chinese coal in 10 years at really cheap prices only to run out and really pay through the nose?
At 200/ for coking coal we are permitted for 2.75 million tonnes. 200 is 265 canadian which is revenue at 700 million at 3 percent or 21 million dollars a year in royalties. With granite paying the wages and tsxv costs we are looking at 40 cents a share per year in cash. With a longwall upside to 8 million tonnes a year this little mine could pump out 1 dollar per year to mox royalties. Puts share price at 4 bucks with 4 times earnings.
As for coking coal going down it could happen but we are now 6 years into a slowdown in commodity spending so I doubt that in 3 years the cycle will be lower. Money put in now will see handsome returns.