By Chris Shaw

Riversdale Mining (RIV) reported solid June quarter coal production, output of 151,000 tonnes in the period largely matching market expectations. But as Credit Suisse points out, the quarterly result was largely immaterial as it is the future growth of the company that remains of most interest to investors.

In the Credit Suisse model most of the value of the company lies in post-2015 cash flows, as while Riversdale has a huge resource base and mine potential, more meaningful production volumes are about five years away at present.

This implies a great deal of volume, cost and coal price uncertainty in coming years, something the broker suggests makes it difficult to be positive on the stock in the meantime. Citi agrees, suggesting there continues to be downside risk to Riversdale's development and production profile over the next few years.

There are also infrastructure issues the company must deal with and Citi sees these as limiting Riversdale's export potential in coming years. So while the target may be to export 10 million tonnes of coal by 2013, the broker doesn't see this as feasible.

Barging material is the most capex and unit cost effective method for Riversdale's Benga project in Citi's view, but as the Environmental Impact Study for this approach won't be given to the government until early next year, meaning a decision later in 2011 at best, barging capacity is unlikely to be in place before 2013 at the earliest.

What this means in Citi's view is while Riversdale could be valued at between $10-$14 per share assuming development and production plans are met, there is significant risk in the company's ability to meet its production hurdles in the medium-term.

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