Replies to post #198 on U.S. China Mining Group Inc fka SGZH

[morokoy]

I was only looking at pure sales figures. These guys are impossible to read tonnage wise, since they seem to have a great deal of "down time", and significant brokered tonnage - "In addition to mining coal, Xing An and Tong Gong also brokered 100,000 tons and
55,000 tons, respectively, during the third quarter of 2009 to meet customer demands, with average cost of $23.42 per ton."
Quite frankly, why mine "Our cost per ton for production was $21.96 in the third quarter of 2009," when you can get it for less that $1.50 more per ton?

Tong Gong Coal Mine Xing An Coal Mines
Production Brokerage Sales Production Brokerage Sales
Three months ended September 30, 2009:
67,416 55,000 107,645 - 100,000 102,148
Three months ended September 30, 2008:
66,448 87,069 153,517 0 157,700 255,909

[v80alue]

You can't use market price on these coal mining company for revenue just as you can't use spot oil/gas price to oil companies. 3 things affect the coal price in my observation.

1 Their sale prices are after transportation, tax etc. I have seen the same mistake from many people including "the best" in the original analysis.

2. Customers. SGZH sales to local long term customer. price is even lower than prevailing.

3. Composition. Produced coal are in different qualities(KCAL, Ash, sulfur, water, size etc). So average sale price is much lower.

CHGY's average sale price is $37 (rough park, out of my head) for 2009. CHGY's coal (6800-7000KCAL) are higher quality coal than SGZH (4000-6000KCAL for XingAn, 65000 for Tong Gong, no production though for Q4). So I expect SGZH's average can't be significantly higher than $37, even if they do produce in Q4 in Xing An.

Using rough estimate of market increase 10-20% on sea port, this may mean 20-40% sales price increase for mining company if transportation, tax etc stay same, which is usually go up some.