Ladies and gentlemen, thank you for standing by, and welcome to the Peabody Energy First Quarter Earnings Release. [Operator Instructions] With that being said, I'll turn the conference now to the Senior Vice President, Investor Relations and Corporate Communications, Mr. Vic Svec. Please go ahead.

Okay. Thank you, John, and good morning, everyone. Thanks for taking part in the conference call for BTU. With us today are our Chairman and CEO, Greg Boyce; Executive Vice President and Chief Financial Officer, Mike Crews; and President and Chief Commercial Officer, Rick Navarre. We do have some forward-looking statements, and they should be considered along with the risk factors that we note at the end of our release, as well as the MD&A sections of our filed documents. We also refer you to peabodyenergy.com for additional information. And with that, I'll turn the call over to Mike.

Thanks, Vic, and good morning, everyone. Peabody turned in very solid results in the first quarter. Revenues, EBITDA, operating profit and earnings per share all rose sharply over the prior year. Our operating cash flows expanded further, and our balance sheet's extremely strong. And we expect to grow from here as we target higher results over the balance of 2011. Let's review the quarter, beginning with our income statement. Sales volume rose 5% to 61 million tons led by higher demand in the Powder River and Illinois basins. Australia volumes were predictably lower given the record flooding that we discussed on our last call, coupled with continuing rains in Queensland throughout the quarter. Higher U.S. volumes and increased metallurgical and thermal coal pricing in Australia drove a 15% increase in revenues to $1.7 billion. Even with the rains, Australia was the primary driver of a 17% increase in EBITDA to $416 million. Operating profit expanded 22% while net income climbed 32% to $177 million. Our effective tax rate was 25% in the quarter, excluding currency remeasurement. And we are targeting the upper 20% range for the full year. Income from continuing operations rose to $180 million. Excluding the non-cash remeasurement of income taxes, our adjusted income was $186 million with adjusted diluted EPS of $0.67, both significantly above the prior-year level. Now let's review the building blocks of EBITDA in more detail on the supplemental income statement. I'll first turn to Australia, where we expected a lighter quarter for shipments. The substantial weather events that continued in the first quarter led to a 10% volume decrease from the same period in 2010. I'm pleased to report that all of our Australia mines are producing and shipping coal with the rail line that serves our Wilkie Creek thermal coal mine coming…

Thanks, Mike, and good morning, everyone. Following a strong start to what is expected to be a very good year, I'd like to discuss the dramatic events shaping the global coal markets, along with the multiple growth initiative that Peabody has been advancing all over the world. Let's turn to one of the most active energy markets in recent memory. So far this year, heavy rains have limited shipments from most coal suppliers south of the equator. Australian met and thermal sediments have set new records. Oil prices have again surged, and questions have been raised about the future of nuclear power and the emissions profile of shale gas. With oil prices again over $100 per barrel, some have cited political unrest or the weak dollar to suggest this is temporary. To us, it is more basic, and the answer lies in limited supplies, major emerging market demand and developed country economies that have begun to recover. Now the very unfortunate events in Japan have a number of implications for coal. We see modest near-term dislocations on Japanese coal imports; a shift in coal use for steel mills and power plants elsewhere as they run at higher rates; and added steel demand for the rebuilding effort. Longer-term, however, all nations are reviewing their nuclear programs, taking some nuclear plants off-line, and looking hard at license extension requests. Third-party reports indicate more than 600 gigawatts of nuclear power are currently under consideration. Now if coal satisfied half that increase, it would translate to approximately 1 billion tons of increased annual demand. China's March numbers show a nation that is rapidly accelerating with industrial production up 15%, thermal generation rising 13% and imports stronger than February. China's first quarter GDP once again beat the pundits and grew at almost 10% clip. India's…

[Operator Instructions] First with the line of Michael Dudas with Jefferies. Michael Dudas - Jefferies & Company, Inc.: Looking at the outlook going forward in the Pacific Basin, do you anticipate the Australian output from the country to offset some of the difficulties you've seen in the first quarter from a coking coal standpoint? And how much do you think coking coal price upside can be limited relative to what steel prices do in the global markets?

Yes, Mike, this is Rick. Let me answer the last part of the question first. As we look at what happened in the first quarter, we saw the met prices go up significantly to $330 a ton, but you also saw steel prices increase roughly about the same amount, $100 per ton. So there's capacity there. Steel prices have gone up and given you enough margin from the steel production to get that done. As you look at Australia overall, as Greg said at the beginning of his remarks, we expect Australian exports to still be higher than last year. So ultimately, we still see met coal coming out of Australia being very, very strong this year, as well as seeing what's going to happen with thermal coal. Having said that, there's obviously still companies that are still having mines that are force majeure, so a little bit that's left to be seen for the rest of the year.

Maybe just to add to that, as we indicated, steel production is up about 10% year-over-year in the first quarter. And if that trend continues, which we anticipate it will for the remainder of the year, even with volume growth and recovery out of Australia, the structural gap within the global seaborne met coal market, we think, will remain through the course of the year.

Our next question is from Jeremy Sussman with Brean Murray. Jeremy Sussman - Brean Murray, Carret & Co., LLC: You mentioned exports in Australia should be higher this year than last. Is it safe to say that you think thermal exports will be up while met exports out of Queensland will be down, or not necessarily? And either way, can you give us a sense of how NCIG given your stake in that terminal is doing?

Well, thermal exports will be up out of the New South Wales, out of the Newcastle ports, because of the additional volumes being driven by the NCIG ramp up. We continue to be going through that ramp-up period there, as the dredging of the channel in front of the docks gets completed over the course of the next 2 quarters in Australia. So the port is going well. We're on that ramp-up schedule, and that's really what's driving the thermal coal exports. Metallurgical coal, that's going to be flat to maybe slightly down predominantly because of what's occurred in the first quarter. Jeremy Sussman - Brean Murray, Carret & Co., LLC: Okay. Very, very helpful. And just a quick follow-up. You still got up to 5 million tons of met coal left to price this year, and you've also given us annual guidance. Can you give us maybe a sense of where you see things shaking out in the back half of the year relative to the first couple of quarters?

Well, I mean all I can say at this point is we think we've incorporated the range of outcomes in the range of our guidance. You are correct in saying that for the last 2 quarters of the year, the met coal pricing is open and subject to what happens in the marketplace. Obviously, we still feel very strongly about the fundamental dynamics of met coal in terms of the potential supply equation through the back of the year, and demand. And so we think we've incorporated what those might be in terms of the range of guidance that we've provided, Jeremy. Jeremy Sussman - Brean Murray, Carret & Co., LLC: Okay. Thanks very much, Greg, appreciate it.

And next, we go to Jim Rollyson with Raymond James. James Rollyson - Raymond James & Associates, Inc.: Maybe -- you've spent a lot of time talking about the positives. Just kind of one small negative possibility out there on the cost side, with obviously, oil prices running, diesel, just materials. It's a high-class problem, but can you spend maybe a minute or two just kind of talking about what you guys are seeing on the cost side? I'm assuming that some of the delta in the guidance ranges versus maybe where consensus was probably falls on the cost side. Just trying to get some color there.

Yes, this is Mike. Some of the cost impact that you will see is really going to relate to the Australia platform. As I mentioned in my remarks, we're targeting the mid-60s. We're a bit higher than that today, and expect to be in that range or a little higher for the second quarter. That moderates somewhat as production and sales come up in the back half. As it -- and then when you think about that platform, we'll talk about commodities and FX. Commodities across the worldwide platform, we're 65% hedged for the rest of the year at an average price of about $81 a barrel. On the FX side, we're about 3 quarters hedged at an FX rate of $80. So when you look at those two, we have somewhat mitigated the impact of commodity cost. Particularly as it relates to the U.S. operations, we think we may be up slightly on a full year basis as it relates to commodities. But it's really not a major driver in the cost profile. James Rollyson - Raymond James & Associates, Inc.: Okay, that's very helpful. And Greg, any color or thoughts on kind of the time frame of getting this West Coast facility up and running?

Well, as you just look at -- for planning purposes, reasonably, there's going to be a two-year or so permitting process. And then you've got an 18-month solid base case of construction. So you're looking somewhere between 3 and 4 years if things go without delay. Obviously, we'll just have to see what materializes through the permitting process. And once we get into construction, we believe it's more controllable in terms of the time frame. But we're looking at that 3½- to 4-year time frame. James Rollyson - Raymond James & Associates, Inc.: Great. Best of luck.

Our next question’s from Holly Stewart with Howard Weil.

Quick question, just a little bit more color on the Twentymile. How much of that is actual longwall production?

Well, the situation -- I mean, all of the lost production at Twentymile that we would incur would be all longwall production. Our development units at Twentymile are still operating. And it really relates to whether we have to relocate the longwall or whether we can proceed with a very significant secondary support program that we've been in discussions with the MSHA technical team over the last 3 or 4 days. So we're optimistic that, that will be the route that we go. But there's still analytical work that's taking place as we speak before final decisions could be made. If we have to move the longwall, then the downtime, about 3 months, is to redirect our development units into an area where we could develop the new location for the longwall to start mining again. So that's why we provided the range, because we really don't have a final answer at this point in time. And obviously, we'll keep people updated and posted as we go through the early part of the quarter.

Okay. Well, how much of the -- I think you did 7.7 million tons at Twentymile last year, how much of that was longwall?

Almost all of it's longwall. I would just -- 95%.

Okay. Okay, perfect. And then just as a follow-up, have you guys had any opportunities? I mean we've heard a little bit of commentary out of some of the other companies about having some opportunities to export some Western bit coal. Have you done any of that yet?

Yes we have, Holly. This is Rick. As I said in our last call, we booked almost 7 million tons of export business in the fourth quarter of last year, and we booked another 3 to 4 million tons in the first quarter this year. And that's a combination of our Colorado products, PRB product and Illinois Basin product. But certainly have been able to book a fair amount of Colorado coal.

Perfect. Thanks guys.

Our next question's from Andre Benjamin with Goldman Sachs.

A couple of quick questions. I guess the first would be on the met coal side, what are you guys seeing in terms of demand by region? We've heard a little bit of, call it, that the Chinese buyers are a little more on the sidelines due to a high second quarter benchmark price. And could you maybe compare how that may differ from, say, what the Indian buyers or Europeans are looking to do right now?

Yes, Andre. This is Rick. When you look at the -- the Chinese, actually, when you look at the total numbers for what they've imported in the first quarter, while they’re slightly down on thermal for various reasons that I'm happy to discuss, on the met side, they're actually have imported more metallurgical coal than they did last year in the first quarter. So while there's a lot of discussion about price sensitivity, they need the coal. And that goes back to our fundamental thesis that the market is structurally short met coal. And the Chinese are going to be short, as well as all the other -- as well as India, but obviously, they don't produce any met coal. And so they're all importing more met coal at this point in time.

And I guess the other reasons?

On the thermal side?

In the other regions?

I was more focused on that, but I'm happy to hear your thoughts on thermal as well.

If you're talking about the other regions for metallurgical coal, I mean the other regions are up as well. I mean you could talk about India -- I mean overall, metallurgical coal, the market is going to grow in line with the 10% growth in overall steel demand.

All right. I just didn't know if there was any pockets you were seeing that were maybe different from the overall global trend, but that's helpful.

And on the thermal side, just real briefly on the thermal side, we've seen China slightly down in the first quarter compared to last year. But there's some reasons for that. Obviously, the price -- a couple of things, supply disruptions in Indonesia and Australia impacted the ability for China to take imports and receive those. Second, there was a dislocation in the pricing. Australian and Indonesian pricing was above fair repricing of the Chinese markets. What's happened since then, of course, is the Chinese didn't buy a lot of coal in the first quarter. Their stockpiles went down 20% to 50% in the regions, their generation's up 10-plus percent on the coal side. So now their stockpiles are short, they're back in the market buying coal. The government has recently increased the tariff rate on electricity prices in 16 of the provinces to make sure that they can afford to buy coal in the open market. And we've seen the Xing Wan Dao [ph] coal price go up significantly, and seen a lot of interested pricing. So as we look forward, we think the rest of the year, where imports into China should be a lot more like last year.

I guess my last question would be back domestically. Could you provide a little color on your PRB versus Western production for the quarter? And I would expect those to trend through the year, given you're almost fully contracted. We just read that you guys did very well at Narm last quarter so do you expect to maintain that high peaking level of productivity going forward?

Well, you're absolutely right. We did have a strong first quarter on the PRB. And in fact, Narm had an acceptably strong quarter. Right now, we're still operating very well. We're still shipping at strong levels, but it's based on the customer demand. And right now, the customers are still calling for the coal. And we continue to look at it through the course of the year. So we don't see a significant change, if that was what the nature of the question was, over the back 3 quarters of the year in terms of our overall volumes.

All right. Thank you very much.

And let's move to Dave Gagliano with CSFB. David Gagliano - Crédit Suisse AG: Thanks very much. I just have a couple of cost-related questions. First, on the Twentymile mine. Just to clarify, I think you said $25 million to $75 million negative impact in Q2. What numbers actually factored into your Q2 targets? And then as a related question, are you assuming any additional negative impacts from Twentymile in Q3 and Q4 within your full year targets? That's my first question.

Well, I think the first part of your question is -- I think both numbers are included in the range. When we established a range for the quarter, we anticipated that being potential between $25 million and the $75 million. Obviously, we're anticipating. Depending on how long we're down, impacts will give us a potential impact, different number for the year, because we do have a longwall move scheduled at the end, in the fourth quarter currently at Twentymile. If we're down for a whole quarter to move the longwall now, that longwall move gets deferred potentially to next year. If we're only down for 3 weeks or so, then that longwall move will still be in this year. So again, as we look at the guidance range for the full year, we have to take that into account. Not having an answer yet. David Gagliano - Crédit Suisse AG: Okay. All right. My follow-up question, just on the commodity and the FX hedges, what's your hedge position for 2012? Around oil and around, say, the A-dollar. And I was wondering if you could just wrap any numbers around the cost sensitivities to changes in the key commodities, say for example, oil and currencies. Thanks.

Sure. This is Mike. When you look at 2012, and it gets -- the numbers are indicative because until we work through the budget process, I'm not sure what the requirements are, but based on the current estimate that we have today for fuel, we're a little over 55% hedged at a barrel equivalent of about $75. For FX, we’re about 55% hedged at again about the $0.80 rate. When you think about sensitivities, a $10 million -- or $10 per barrel change in the price of oil is about $10 million impact on fuel prices -- or fuel cost to us. On FX, a 0.05 change in the exchange rate for 2011 is about $18 million, and that ramps up a bit to more like $50 million as you get into 2012 with the lower hedge position. David Gagliano - Crédit Suisse AG: Okay. And just to clarify that sensitivity. That $10 on the oil side, is that before or after the hedge?

That is net of hedges. David Gagliano - Crédit Suisse AG: Okay, perfect. Thanks very much.

And next, we go to Brandon Blossman with Tudor, Pickering. Brandon Blossman - Tudor, Pickering, Holt & Co. Securities, Inc.: Let’s see, first, I'd like to follow up on Andre's PRB question. Just perhaps digging a little deeper, does this -- you said it was customer-driven, is this spot tonnage, or contracted tonnage for the kind of incremental production out of the PRB?

Well, all of our -- we were essentially contracted when we started the year, so this is all contract tonnage. But even within our existing contracts, customers have the ability to move some volumes around quarter-to-quarter. Very strong burn in the first quarter. And so we'll just see how the rest of the year materializes. Obviously, summer weather, and then ultimately fourth quarter weather will have some impacts in terms of the customer requirements in the back half of the year. Brandon Blossman - Tudor, Pickering, Holt & Co. Securities, Inc.: And I mean is it possible to contrast that view or the production view with price trajectory over the quarter?

This is Rick. I mean, really, we're not pricing any business in the quarter, as Greg said. This is contractual business we're delivering, and maybe we're delivering at an accelerated rate because the customer’s requiring more coal. And so and we're able to meet those shipments out of our production platform. And that's what's really happening. When those trains show up, we're loading. And we'll see how that works out at the end of the year, whether the customers still need more additional coal. If they do, obviously that will have an impact on pricing at that point in time. Brandon Blossman - Tudor, Pickering, Holt & Co. Securities, Inc.: And I was thinking more just the spot price in the market, we pulled probably $1 or so off the '11 and '12 curve throughout the quarter.

We haven't been selling anything on the spot market. As a matter of fact, I think we've only sold about 3 million tons of PRB coal during the whole quarter on a go-forward basis. So we haven't sold anything at those prices.

Yes, because we're contracted for the year, that would be more of an issue for folks that have an open position this year. Brandon Blossman - Tudor, Pickering, Holt & Co. Securities, Inc.: And generally, from a market standpoint, do you think that there's just fewer -- there's just like less liquidity out there, and folks are getting their tonnage through acceleration of contracted tonnage as opposed to spot tonnage?

I think you're better off looking at the long term. In the PRB, you're better off looking at the longer-term, the annual market as opposed to the quarterly market. The quarterly market is definitely impacted by liquidity and what's happening in the marketplace, and if the customers are in shoulder season or not, and who's buying, and the customer's long or short coal, and they're putting coal in the market. You really got to look at the longer term, look at '12, '13 on an annual basis, and what you'll see there is prices that are in contango up a buck each year from where they are today.

Our next question's from Curt Woodworth with Macquarie.

I was wondering if you could just talk kind of broadly about what you're seeing in Australia on the export position. When do you think you're going to get back up to full capacity? Seems like you managed the weather-related issues better than some of the other companies. Just the country in general, when do you see it getting back to more pre-flood export rates? That's my first question.

Sure. Well, I can obviously speak specifically about our operations. I don't have a sense, because we don't have the detailed knowledge in terms of all of our other competitors in Australia. From our operating perspective, I mean, we've got all of our operations, except for Burton, are essentially up to full productive capacity. Burton, we've got one of our pits that the very lowest level coal seam, we're still pumping the water to uncover that, and we expect that will occur this quarter. But essentially, Burton is back into production from the upper seams, it's just hampering our full flexibility. So we see a strong shipping quarter this quarter, and then building through the back half of the year. For instance, our Wilpinjong expansion should provide additional tonnage in the fourth quarter of this year for export capabilities. Our stockpiles are recovering. The last of the rail issues for us was the Wilkie Creek line. It was reopened right at the end of March. We're going through a bit of a ramp-up period as they continue to finalize the track repairs, but that should be behind us in the course of another month at the most. So when you look at port capacity right now, and rail capacity, those are not an impediment. Particularly out of Queensland, there is capacity both on rail and port. The issue is other producers are still having production problems. So we're trying to be opportunistic in terms of using some of that capacity. New South Wales, I think right now most people are up and running. There's a couple of unique situations with a mine that had some underground water issues and another one that's got some underground fire issues. But overall, the industry in New South Wales is running relatively well, without residual rainfall effects.

Okay, great. And in terms of the 2Q price dynamic, is most of your volume that's going to be sold out of Australia, would that be under the new benchmark? Or do you have any carryover or pushed out tons that'll be involved in the second quarter? Thanks.

Most of the volume’s going to be priced obviously on the quarterly benchmark for met at $330 a ton. And then as we said on the thermal side, we have about 5 million to 6 million tons still to price, and the majority of that will probably get priced at the $130 benchmark for thermal pricing. As it relates to carryover tons, we had less than 100,000 tons that qualify for carryover. We were able to negotiate most of that into the -- incorporate into the benchmark pricing as a result of some of the force majeures that we had as a result of the flooding. So very, very little impact on carryovers.

Great. Thanks.

And next to the line of David Lipschitz with CLSA. David Lipschitz - Credit Agricole Securities (USA) Inc.: What are you hearing from your Chinese aspects in terms of some domestic ramp-up of coking coal and the different spread between the international price and the Chinese domestic coking coal price?

Well, I mean there's no question that China will continue to do what they can to develop metallurgical coal resources that they have and thermal coal resources, for that matter. But I think, as Rick alluded to earlier, we think in both context and particularly in the metallurgical, the high-quality metallurgical coal, they are structurally short. And they will always require imports of the highest-quality met coals, and I think the market reflects that activity. As Rick talked about, they continued to import strongly through the first quarter on the metallurgical coal, and that's because of the structure of their supply industry for metallurgical coal. David Lipschitz - Credit Agricole Securities (USA) Inc.: Thank you.

And we'll go to Brian Yu with Citi.

I was wondering if you could share with us what the range of metallurgical coal price forecast's baked into your guidance for the full year and the second half? This would help us calibrate our models for our own pricing assumptions.

At the end of the day, I can tell you what we've baked in for the second quarter, because those are the settlements. For the back half of the year, we've just applied a range probably not dissimilar than the full range that's out there in the third-party views and baked that into the range that we have for the end of the year. I mean obviously, as you know, as we negotiate these things on a quarter-by-quarter basis in the future, we don't talk about what our forecasts specifically are. And we just incorporate our range into our guidance, and that's why you see our guidance where it's at.

Okay. And then the second question is, Greg, if you could share with us any color you're seeing in the spot markets. It seems like the trade presses are saying that there's not much spot activity, reluctance on the buyer side to commit at these levels. But it seems like there's a shortage of coal out there. So anything, any thoughts that you have on spot market activity for met?

Well, spot market activity for the metallurgical side of the business is always a little bit spotty, if you will. It's a contractual business. Customers need certain blends of coals, and they try to contract in advance to get the right product they're looking for. And they're opportunistic if they can. If they get short, they're going to be in the market looking for coal. So as we look at it, we've recently sold coal into the spot market, and we've received very good pricing for that. But the majority of what we do is under contract. And I think that's true for most producers. They've tried to put an index together to track spot pricing. At the end of the day, there's not a lot of spot business in the met coal side.

Thank you.

And let's go to Garrett Nelson with BB&T Capital Markets. Garrett Nelson - BB&T Capital Markets: Just a follow-up to that last question, what's the expected split of your 9 million to 10 million tons of 2011 Australian met volumes between your 4 different products?

Well, the high quality of our coking coal side would be 60-plus percent, and our remaining 40% is going to be the semi-hard and PCI. Garrett Nelson - BB&T Capital Markets: Okay, great. That's very helpful. Thank you.

And we'll go to Sanil Daptardar with Sentinel Investments.

Can you just give us a color on the logistics scenario in Australia?

Sure. We can take a look at what's occurring. I mean obviously, in New South Wales, 2 big projects going on. One is the NCIG expansion and completion of Phase 1 and then development of Phase 2. The biggest component of that is the dredging work that's going on within the ship channel in order to allow the full delivery and loading of cape-sized vessels. That'll occur through the next couple of quarters of this year for the shipping capacity. And then there's some additional expansions on the stockpile area and loading facilities that'll carry over for a period of time. There's also some significant amount of rail work that's being entertained or done in New South Wales to increase rail capacity. And then longer term, there's discussions about additional expansion at PWCS, and then potentially another new terminal, terminal 4 for longer term capacity. In Queensland, the big activity right now is what they call GAPE, which is the Goonyella Abbott Point Extension. That rail line is being built, the port activities are taking place. And that, initially, will add about 50 million tons of export capacity out of Abbott's Point. And in the meantime, work continues regularly on rail expansions into the Goonyella line. And then we've recently seen the announcements on Hay Point now going through an expansion over a couple-of-year period of time. So we've always said that the Australian infrastructure will continue to expand, that's the good news. And market demand is continuing to expand faster, that's the better news. But we do see overall growth, both out of New South Wales and Queensland, in terms of volumes over the next several years.

Okay. And after the recent flooding, has rail situation improved in Australia?

Yes. The issues right now, as I said earlier, are not related to rail issues or port issues. In Queensland particularly, it's related to producers not having the coal. We're back up and running, normalized, but not all producers are.

Okay. I was just wondering on your unpriced met tonnage for the second half, about 4 to 5 million tons, you cited that China is structurally short on met coal. Just wondering why, if it's structurally short, why would not China sign the contracts now, but it's waiting for the contracts to be signed later on?

Well, the process of metallurgical coal markets on an international basis are that they're quarterly contracts, they're being priced on a quarterly basis. So you may have contracts with the Chinese, but they won't be priced until the next quarter because they're being set off the benchmark pricing. And that's happening in all of the markets, essentially.

[Operator Instructions] And now we'll go to Lance Edis [ph] with 2E Brothers [ph].

I just wanted to know -- I just wanted to get a little more detail on the West Coast Port project. I think you said 24 million tons, I believe the Asian price for thermal coal you gave is $130 a ton. So what would that relate to as far as how much is it going to cost to ship it there, how much is it going to cost on a per ton basis, maybe if you could for the capital cost for the forward? And then how much would that relate to back for the actual coal, I guess?

I think it's probably a bit too much detail at this stage of the game, but I think what I can tell you is that obviously, when we look at it on a net-back basis, backing out all those costs, that we come up with a positive margin that's favorable to what we see in today's U.S. market. But today, to go into the rail rates and ocean freights, and I can tell you that the oceangoing freight rate's very low right now, which is -- that's a good thing. And the capital cost, we've considered all of that. At the end of the day, we're very comfortable that it's a very profitable exercise.

Okay, is this more also to, I guess, potentially raise U.S. prices by being able to export more? Or is it more that you look at it as a pure just kind of a one-off basis on the project?

I think you could look at it on both bases, I think you could look at it from number one, you have to make money on the initial sales that you're going to make off the coast. And if you could make money on that and it tightens the market, well that's a good thing as well. And ultimately, if the demand is in Asia and it's not in the U.S., that's where we're going to ship the product.

All right. Thank you.

And we'll go to Brian Gamble with Simmons & Co.

A couple of things. One, I guess maybe you could start with Mongolia, just give us an update on the Togo reserve. I think there have been some news articles that speculate that could be any day. What's your opinion on the decision process there?

The decision process has been very long, and it’s taken a long time to get to where we are. I think we're -- the positive news is that we're on the short list with 6 total companies, Peabody being one of those. As we look -- we're being told that probably in the next 30 days, there will be a finalist group. May not be just one company, could be more than one company. But we'll have to wait and see. But I think it will happen sometime in the next quarter.

How many times have you been over there, Rick?

Too many.

I'm sure.

And more to come. But that's okay. It's a great opportunity. As you look at that deposit and you look at the metallurgical deposit. And we've just been talking about it, how short China is met coal. And you look around the globe and look for large deposits of metallurgical coal that can be mined cheaply, there aren't any. And this is one of the last few that are out there, and so we're fortunate to still be in the finals here, and we're going to continue to try to make it to the final list.

On the guidance side, if I may, I guess half of the delta between the upper end and lower end of your range is based on Twentymile. What would you say is the biggest component of the remainder?

Well, I mean if you look at the range, there's multiple components. There's obviously met coal pricing in the back half of the year is a variable. We have some volume unknowns, and exactly what's going to materialize out of the Twentymile operation. We've got shipping issues. We always remind everyone that most of the vessels that sail out of Australia are a blend of not only our coal but co-shipper coal. And to the extent that you would have a couple of vessels, and this has happened before at the end of the year, that slip over into the first quarter of 2012. These are high-priced, high-EBITDA margin vessels that we're talking about. So we build in shipping flexibility. Obviously, we've got estimates in there for our trading platform for the year. And we've got trading platform variability built in. We've got -- we're cognizant of not only U.S. volumes, but we run a mining business which has periodic geologic issues. So we build in a lot of these things. I think it's safe to say right now, one of the biggest variables is what the volume and pricing for met coal in the back half of the year would be.

Thank you.

[Operator Instructions] Our final question will come from the line of Wes Sconce with Morgan Stanley.

Thanks for taking my call. Just curious, how have the geological issues at Twentymile affected your expectations for the timing of the Sage Creek project? And if you could provide any color on expected capital costs and the cost structure of the project, that would be helpful.

Well, ultimately, what's occurring at Twentymile won't impact the timing on Sage Creek. That's an extension and follow-on of Twentymile, and we're only talking about whether it's 3 weeks or 3 months. We're still working through our supply agreements that would potentially baseload the Sage Creek operation. And we're doing some more detail engineering in terms of ultimately the capital cost. So not really in a position to get too specific on any of that right now. Other than it's a great reserve, and Twentymile has been a great performer for us, continues to be. And we look forward to that extension.

Okay, great. Thanks. And as a follow-up, could you discuss the Western bit market and how you're seeing the export market coming into play?

As we mentioned earlier, Wes, we have been exporting some product out of Colorado into the European market. It's a good product for the Europeans. And so we've been able to move quite a bit of tonnage out of our Twentymile platform into the European market, on a term basis, as a matter of fact, for a 3-year period.

Thanks for the color, guys. Good luck.

And with that, I'll turn it back to you, Mr. Boyce, for any closing comments.

Well, thanks. I want to thank everybody on the call this morning. Obviously, we think it's a great time for Peabody in the industry given the global dynamics of what's happening in the energy markets. Obviously, I would like to thank the Peabody team. From a safety perspective, they continue to improve our performance. We don't want to take lightly how quickly we recovered in Australia relative to others. That doesn't happen other than a full dedication of the team that we have. And when you look at where we're positioned globally, for the opportunities to grow, whether it's Mongolia, whether it's China, whether it's what we're doing in Indonesia, whether it's an expansion of our Australian platform, whether it's the large port we're involved with on the West Coast, the expansions that we've delivered in the U.S., that's all been done with our people, and I want to thank them. And we look forward to keeping you apprised as we move through the year. Thank you.

Ladies and gentlemen, this conference is available for replay. It starts today at 12:30 p.m. Central, will last until May 19th at midnight. You may access the replay at any time by dialing (800) 475-6701 or (320) 365-3844. The access code is 196275. That does conclude your conference for today. Thank you for your participation. You may now disconnect.