Atrum Capitalises on Flight from High Grade Coal
Issue 95, September 2014
Atrum Coal has continued to defy a grim coal bear market, buying and developing assets as peers across the industry seek to sell them or close them down.
Last week, Atrum announced a $2.5m deal with royalty house Anglo Pacific, buying its Panorama coal tenements in Canada’s British Columbia. The tenements abut Atrum’s giant Groundhog project, where the company has drilled out the world’s largest anthracite deposit, so far totalling 1.6bn tonnes.
“We’ve always wanted to consolidate the region so all our seams are continuous,” says managing director Dr. Eric Lilford, “but second, it’s strategic. Ultra-high grade anthracite is such a rare commodity, the last thing we want is competitive operators within the region.”
Listed in 2012, shares in Perth- based Atrum have since risen 7-fold to A$1.50. Panorama adds over 10,000 hectares to its existing 38,000 hectare license area, following a similar deal in January. On Wednesday, the company also bought up to 70 per cent of the 147m tonne Elan coking coal project in Alberta for its subsidiary Kuro Coal, which Atrum plans to spin-out.
Environmental studies aimed at mountain goats and salmon, which can migrate on a 2-year cycle, mean commercial production at Groundhog is not due until late 2016, but the project has already moved its first coal under a trenching programme.
Trenching, bulk sampling and the boring of access tunnels through its main coal seams allow Atrum to move at least 100,000 tonnes of anthracite, priced around $200 per tonne, before the granting of a full mining license. “It’s not going to be all outflows whilst we develop the project,” Lilford says.
Panorama is due to be included in a revised mine plan due later this year, leading to “substantial improvements” in cap-ex, currently projected at $77m. The company expects to hit production of 3 to 5m tonnes per annum without a major financing; chairman James Chisholm and director Russell Moran together own 42 per cent of the stock.
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