I've been trying to get a grip on how coal mines are valued for capitalization. Looking at Peabody (NYSE: BTU) in the States it looks like $2.3/short ton of reserves for thermal coal. Then I came across this BHP-Mitsubishi acquistion where they paid $3.5/short ton of reserves of Metallurgical coal for an undeveloped project.

So taking the average of GXS's wishful (2-4 billion ton) projections at 3 billion tons and a price of $2.3/ton we would be looking at a Valuation of around $6.9 billion dollars or $383/Share.

If anyone knows of an analyst that follows coal send me a PM and I'll tack him down so we can get them to work on putting a valuation on GXS.

Lets hope each and every one of those 7 hole hit!!!

Article below.

... Been There

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BHP, Mitsubishi agree to buy Australian coal project for $2,4bn

Published on 17th July 2008

Diversified miner BHP Billiton and partner Mitsubishi Corporation will pay about $2,4-billion in cash for New Hope Corporation's New Saraji metallurgical coal project, in Australia, the firms announced on Thursday.

New Saraji is an undeveloped coal deposit located next to BHP Billiton Mitsubishi Alliance's Saraji mine, in Queensland's Bowen Basin.

The project currently has estimated resources of 690-million tons, comprising 156-million tons of indicated resources and 534-million tons inferred.

Demand for metallurgical coal, used in the steelmaking process, has surged over the last few years, driven by demand from emerging economies like China and India.

BHP and Mitsubishi will buy the mining lease application, exploration permit and a port user contract entitling the alliance to 10-million tons a year of capacity at the Abbott Point coal terminal as it is expanded.

“Subject to the results of further resource exploration and evaluation program to be undertaken by BMA, New Saraji has the potential to be developed into a large scale, high quality metallurgical coal operation,” said BHP Billiton Coal president Dave Murray.

“New Saraji could also potentially deliver significant synergies due to its proximity to BHP Billiton Mitsubishi Alliance's existing Saraji mine."

BMA is a 50:50 joint venture between BHP Billiton and Mitsubishi Corporation.