getting better

http://fs1.hidemyass.com/download/ygtva/pa15k8818g5gapfasjvvkf9rl6

According to Salman Partners:
http://fs1.hidemyass.com/download/ygtva/pa15k8818g5gapfasjvvkf9rl6
COALSPUR MINES LIMITED
JUNE 20, 2013
Finalized Mine Development Plan Reduces Vista Phase 1 Capex
Coalspur provided details of the finalized development plan for Phase 1 of its Vista thermal coal project, with a capital cost reduction of $197M through accelerated development and a turn-key EPC contract for close to half of the development cost.
Key Points
• Phase 1 (6 Mtpy) is now expected to be completed in one step, rather than a two-stage process, for $458M (with contract mining), down from the previous estimate of $655M. The cost savings are attributed to a lower contingency with increased confidence in costs and EPC terms, lower construction input costs, and the competitive processes for contractors. There is some minor acceleration of spending, as the $458M is to be spent prior to first production (versus $445M to first production previously). Coalspur still ultimately intends to build Vista up to a 12 Mtpy capacity with Phase 2 in 2018.
• An experienced EPC contractor (Taggart Global) has been selected, with a lump-sum turn key contract of US$221M for the wash plant, conveyors and loadout. This shifts some of the development risk to Taggart and provides a higher degree of certainty on capital costs and schedule for this component of the development (the EPC contract will contain liquidated damages related to plant performance and project schedule).
• The fact that the other half of the development capital has also now been engineered and tendered provides a greater level of confidence in the total Phase 1 costs.
• The target for first coal production is delayed slightly, to mid-2015 from Q1 2015 (but still in line with our assumption of Q3 2015). However, the key regulatory approvals are still outstanding and although management is hopeful that they will be received in the next few months, further delays are possible. Construction start-up is now planned for September this year.
• The unit operating cost estimates have increased slightly with the inclusion of contract mining, consistent with what we had modeled, with an expected FOB cash cost of $63.80/t over the first 10 years of Phase 1 production.
• Shareholder approval for the US$350M debt facility from EIG Global is expected at the AGM on June 27. This still leaves a Phase 1 funding gap of ~$110M (depending on FX rates) based on the new capex figure. This needs to be secured within the next 9-12 months, and is expected to come via a strategic project level investment and/or marketing or off-take arrangements.
Valuation & Recommendation
Updating our model for the revised Phase 1 plan, our NAVPS for CPT increases by $0.04 to $1.18 (see page 3). Looking ahead, we expect the regulatory approvals and the start of construction to provide some positive catalysts for the stock; however, with the funding gap that remains for Phase 1, financing risk concerns could continue to be a headwind in the near term. We have a SPECULATIVE BUY rating on CPT, with an unchanged price target of $1.05 per share (0.9x NAVPS).

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