This is a stock I found 2 weeks ago which was trading at a support. I see that its up 20% today on the announcement that they have an expand coal resource. This is an attractive buy on the face of it. The problem I have is the high entry price for buying into the project ($20mil plus equity).
The other issue for me is whether there are any issues barging coal down the Barito River. They are so far up the Barito River...I'm wondering if the 'proverbial paddle' would do them any good. Barging is a wonderfully low-cost mode of transporting coal, but up the top, you will have issues with shifting sand bars, adequate water levels.
As a coal analyst, I didn't have the opportunity to deal with projects this far up, or to live and breath this river. It might well still be a substantive river at this point.
If you know the answers - great!
This is a fairly low energy coal, so better suited to domestic power generation. No problem; the Indonesian economy is doing well!
The problem with companies buying projects at the top of the commodities boom is that there is very little profit to etch out by shareholders. In this case, I there is plausibly a profit because of the Asian growth, i.e. Sustainable prices. But then I think there are cheaper entries. i.e. Coal seam gas in Australia. This project though is close to production. Still, I'm interested if they are "mining the market", and will suddenly announce that they cannot ship ore, so they have to truck it 300-500km down river. For you to find out. I'm a lazy analyst!
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