Disclosure: I am long ACI, CNX, PCX, BTU, ANR. I am a consultant for SouthGobi Resources.
The following in-depth interview was conducted by Peter
Epstein with the CEO of SouthGobi Resources, Alex Molyneux. Paid
subscribers to a premier coal industry newsletter published by Doyle
Trading Consultants received this interview on February 10th. As the
author of this content, I have been permitted by Doyle Trading
Consultants to distribute this interview. Subsequent to its posting here
on Seeking Alpha, this article will not appear anywhere else.Alex Molyneux: Canadian company SouthGobi Resources (SGQRF.PK), located 45 km from the Chinese border, is 1 of just 2 dominant Mongolian coking coal exporters. We are in the 3rd or 4th inning of explosive organic volume and earnings growth. Within 3 years, SGQ will be exporting 10 mm MT of coking coal. Our cash costs, averaging in the low US$20's per MT, are among the lowest in the world. China's 12th 5-yr plan clearly focuses on building out inland Chinese provinces where we have a distinct transportation advantage.
We have 535 mm MT of coal resources, which give us a +25-year mine life and we are actively exploring for more coal. SGQ is building a paved haul road to the Chinese border that will be able to transport in excess of 20 mm MT/year. Unlike many global players, SGQ effectively has no capacity constraints. Despite minor setbacks from time to time, we have to date delivered the volume and margin growth that we advertised when we listed in Hong Kong in May 2010.
