LLEN - I've got last quarters, Q2, CC Q/A notes if that's Any help? If the notes don't make any sense I don't mind expanding on them, if I can.
Q2 CC
Q – How much coal in Q2?
A – Talk Offline about that
Q Ping ye – 150, 31M proven coal – when will you be able to mine more?
A Mines understate reserves (only enough to get permit) – they ask for permits for increased capacity. Aim is 300 so mine not shut down. Ping @ 300K
Q Split Mining vs Coal Washing
A Talk Offline about that
Q (T-Squared) – Coal prices Q3 vs Q2
A Last Winter 120s – Summer went to 110. Expecting to reach last Winter but seeing escalation faster we modeled $110 pro-forma and it's above that. All numbers do not include any acquisition
Q You still wholesaling and washing other peoples coal?
A Yes, we have twice capacity ping ye 600 – anticipate growth. But wash own but also washing other peoples for now – low margin but adds to bottom line. KMC, the brokerage business, is still operational. Price wise coal lower in summer but will pick up in Winter. KMC is strategically important is a marketing arm that allows them to talk to all coal miners and get their name known. Allows us to learn about new businesses.
KMC buys in summer and sells in the winter
Q Around 30 – 40% Washing most revenue expansion was washing in last couple of quarters?
A Yes, but acquisition focusing on mining acquisitions vs coal. We want to make sure that they can avoid middle men.
Q Met coal Pricing
A Met more volatile. Last Winter High $200 tonne then under $200/tonne in Summer and back to $200's now. Model on Met coal around $180. Will remain volatile – demand constant in inner china but slower on Coast.
Q Acquire 9% of Bowie and produce 5M. Is that like buying a 450K tonnes mine for L&L?
A Will have nice return on equity and interest. Our interest is in export. Looking at 1M tonnes but could be 2M tonnes or more in later years. On export we could bring higher margin for the mine even now. First step in operating with Bowie Mine owners.
Q How quickly can we take the 9% in Bowie? When exercise?
A Hope for Exercise in 6 months but ongoing talks.
Q How is the acquisition going on by this Calendar year and non dilutive?
A Still expecting that in this calendar year so 4 to 5 Months. Acquisitions highly accreative – 1 to 2 time EBITDA and expecting similar returns.
Q Reckon it's 40 but only 35
A Foreign exchange gains – but not including it.
Q (John Britches JP Morgan) – control over prices in China? Is that likely to effect you and how?
A Controlling cost of coal. Seen so much that it's above their expectations so if they froze it not a problem. L&L would prefer steady rather than volatility/ bubble. Deliberate have half thermal and half met.
A Two countries - more pressure on coast but less of a concern for prices in West. So, less of a concern where L&L is.
Q JPM – LLEN is on the bottom quartile on Chinese cost curve?
A pride themselves on lean and mean. Take mines and add shifts from 1 to 2.
Q Disconnect between price of coal in Guandong – is that transport costs?
A Yunnan and Guizho province have coal – no others in South West. Not aware of any other places.
LLEN get pick and choose the mine. Mining costs are mine specific. They look at the mine geology, the operations, and seam thickness and the grade – all effect the efficiency of extracting the coal.
Good mining knowledge in Dr Sid pang. Top geologists and longwall - look to see which would be the most efficient.
Q Doubling run rate of new acquisition? What number start of year or now?
A Run rate 218 and looking at doubling that with acquisitions. 218 is organic guidance. If successful then we can get 440 ish then – won't happen all this year but we will grow it to be double.
Q Using transfer of technology/knowledge of Bowie formally or just potential? They bringing anything more to the table?
A Bowie has a lot to offer but that's not what LLEN are looking at. LLEN aren't looking so much at technology and more about practices. (Re-edited answer much later on)
Q Bowie – option to acquire up to 9% interest in Bowie mine. Does option vest when they the $3M and what cost of option to get 9% interest?
A Option which we expect to exercise but no exact timing. Vesting price is nominal.
Q committee in auditing issues?
A Finished internal control audit. Completed internal review of internal controls with assistance of outside entity. Hope to complete Internal audit soon.
Q Interest in Mineta played any role in Bowie mine.
A No. But former Transportation having him will be of great benefit for movement of coal from US to China. Strategically unique. Were optimistic on what this beginning means.
Q Regulation in China on forced acquisitions
A Small coal mines looking for partners. Only coal provinces Shannxi, Inner Mongolia in North and L&L in the South
Q Margins. Gross margins gone down?
A From washing plants but verticalalising and avoid washing guys applying margin pressures.
Q Receivables gone down compared to last year any colour?
A Follow up offline.
Q Time in difference in coal and production?
A Follow up offline.
rich
