CERX's four properties in Colombia look attractive, and not just for their deposits. They are close to viable road and barge links that can handle existing traffic. The company may have to budget more capex to facilitate barge operations on the Magdalena River if it cannot benefit from the Colombian government's efforts to upgrade infrastructure. This will help ensure it has the logistics capacity to meet its production targets for 2013.
CERX claims that its cost of production is $50/ton. Consider that coal prices in many producing locations in the U.S. were under this threshold in 2010, and that the price of coal in the U.S. has rarely been above $70 in the past three years. The good news is that the export price of coal from the U.S. averaged $120 in 2010. Perhaps CERX should target export markets other than the U.S. CERX's advantage is that its deposits contain mid-volatility coal, used to make coking coal. The price outlook for coking coal is much more attractive, with some forecasts predicting it to sell for $226/ton in 2012. South Korean steelmakers are willing to pay as much as $235/ton for coking coal. The company does not yet have funding for the coking facility they plan to install in a wholly-owned energy park (according to their 10-K filed on March 30, 2011) but I give them credit for acknowledging the need to raise capital to do so.
The strongest aspect of this particular company is its management. It is rare for junior explorers and producers in the resource sector to have an entire top management team with careers exclusively in that sector. CERX comes closer to an ideal team than any junior coal company I have seen. I have been skeptical of other resource companies with histories of negative net income, free cash flow, and retained earnings. Those other companies were almost invariably run by inexperienced teams who didn't understand mining. I am willing to be more patient with CERX in awaiting improvement. This one is worth tracking for future developments.
Full disclosure: No position in CERX at this time.