RIDLEY TERMINALS, British Columbia, where Coalspur has closed port allocation of up to 13.5m tonnes per annum. Ridley is 500km closer to Japan’s Fukuyama than Australia’s Port of Newcastle. Owned by the Federal Crown, it is expanding its coal stockyards and doubling rail capacity. Credit: Ridley Terminals

RIDLEY TERMINALS, British Columbia, where Coalspur has closed port allocation of up to 13.5m tonnes per annum. Ridley is 500km closer to Japan’s Fukuyama than Australia’s Port of Newcastle. Owned by the Federal Crown, it is expanding its coal stockyards and doubling rail capacity. Credit: Ridley Terminals

Coalspur Moves Quietly Towards Production

Issue 28, January 2013

“Management have done a fantastic job,” says Coalspur’s non-executive chairman, Colin Steyn. “Their first task was to secure a quality orebody and that they certainly have.”

Sitting in Alberta’s foothills to the Rocky Mountains, over three adjacent properties bordering a coal freight line, the company has amassed a thermal coal resource of 3.7bn tonnes. Its core Vista project has marketable reserves of 313m tonnes, supporting an open-pit mine life of 30 years. “The quality is excellent,” says Steyn. “Its an ultra low-sulphur thermal coal and will blend very well.”

He sees Coalspur’s cost structure however as its competitive advantage. Having secured rail and port allocation of up to 12m tonnes per annum from 2015, the company expects ‘Free On Board’ costs of under $60 per tonne, half of which is contracted. “Even in the current market of $95-odd per tonne that gives you a competitive margin to deal with.”

Pending final regulatory approval, expected shortly, Coalspur will begin construction in July. Forecast capital costs of C$527m ($525m) will take the company to first production, $300m of which was secured by a debt facility last month.

Behind Coalspur’s seemingly easy developmental success is a management team and backers with deep operational experience: chief executive Gill Winkler was poached from BHP Billiton’s thermal coal division, where director David Murray was previously president.

Behind their appointment in turn is shareholder Highland Park, a group of private investors, including Steyn, who sold LionOre to Norilsk Nickel in 2007 for $6.3bn and Mantra Resources to ARMZ in 2011 for $1.2bn.

“We look for opportunities where we can contribute cash, expertise and strategy,” says Steyn. “The experience we have is post-exploration. It's a boring phase that a lot of investors are not interested in, but we are and we believe we have an advantage there.”

Having declined with an indiscriminate thermal coal sell-off, Coalspur is currently valued at C$562m ($560m). “With the existing management, we have developed Coalspur from an exploration play into a project ready for construction. Once the commitment is made, I think we will re-rate.”

“The experience we have is post-exploration.”

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