VHGI Holdings Inc fka VHGI

[Camaro Guy]

Thanks for the perspective. I don't have a background in mining, but I think placing valuations on coal reserves alone appears to be a very narrow use of available ROI metrics.

What I have been able to read, there are substantial differences in the coal quality ratios than even those of the Peabody mines, and other mines in the Illinois Basin. Actually, the reserves in the Hillenbrand Preserves available to VHGI Holdings, was actually an older Peabody mine. I am wondering how did they let that slip a way from them.

There is a substantial savings to VHGI Holdings for employing the box cut mining approach, dependence on machine automation, on-property wash plant, low royalties, and rail loading capabilty that these other mines do not utilize. I agree the disparity in reserves could define a smaller value associated to the stock price, but having the higher grade of coal and a rare 25 -30 year life of the mine could mean 2 to 3 times or more value compared to mines with similar singularity.

From the web site...
2012 VALUATION UPDATE OF THE LANDREE MINE COMPLEX
Assume:
1. 7.3 million tons No. IV coal recovered from Yr.1 to Yr.11. at $61/ton.
2. 17.9 million tons total No. III coal recovered from Yr.2 to Yr.13. at $45/ton.
3. Revenue & Operating Expenses remain constant from Yr.2 through Yr.13 when No. IV Seam coal is exhausted.
4. Surface Mobile Equipment and Underground Mining equipment replaced
or rebuilt
approximately every 4 Years.
5. CapEx needed in 2013 & 2014 is to development & to expand production in the No. III coal seam .
6. The direct operating expence for Yr. 2 through Yr. 13 is assumed to be $33.75/ton.
7. All cost figures stated in constant 2012 dollars


I made a post last week where Peabody, has been spinning off mines where they are becoming independent and busting unions. Tells me they have way too much operating expense, and carry forward baggage.

http://www.foxnews.com/us/2013/05/29/judge-backs-bankrupt-coal-producer-in-benefits-dispute-with-union/


All in all, I get your point on consolidating the expectation of relative value. But I believe we have a company of much higher value here.

Go VHGI !!