Good news here people. Once the market and analysts realise that...

Good news here people. Once the market and analysts realise that there will be very little if any dilution on this stock and that finance is very close to being achieved, with the amount of shares up for sale this will move very quickly if a large investor decides to take a position.


Attila Resources Limited

“Alabama Slammer” - Low Opex & Capex Coking Coal

Attila Resources Ltd (“Attila”, “AYA”, “Company”) recently completed a pre-feasibility study (PFS) on the potential development of the Kodiak Hard Coking Coal Project (AYA 70%) in Alabama, USA.

The study highlights a robust project development with near-term production of ~2Mt (saleable) per annum of high-quality coking coal over an initial mine life of +12 years. Importantly, the PFS has delivered low cash costs of US$90/t FOB for the LOM, exceeding our preliminary cost estimate of over US$100/t. The all-in cash costs are expected to position Attila in the lowest 10% for seaborne metallurgical coal producers globally (Wood Mackenzie data). The project has low start-up capital costs (~US$52m) as existing infrastructure (preparation plant and rail) can be utilised to wash and then transport the saleable product to the Port of Mobile (~370km south), where ample export capacity exists and discussions with terminal operators are well advanced.

The Company also has staged development options that can reduce upfront capex through a phased ramp-up in production. The staged development approach is expected to maintain low production costs while generating strong early cash flows to support production increases towards 4Mtpa ROM coal.

Upside in Maximising Yield for Improved Saleable Coal

The PFS assumes mining of the Coke and Atkins coal seams via underground (room and pillar) mining, accessing workings through the existing portals. The seams contain a combined reserve of ~48.2Mt, with the Coke seam contributing 55% of the tonnes. The marketable coal reserves of ~23.4Mt are based on a LOM preparation yield of 48%, which is based on ash contents of 4-5% ADB. Potential exists to improve the yield (and hence saleable coal) by producing a higher ash product and potential production of a middling’s fraction which could be sold for domestic power use. The optimal yield will be determined during the course of the BFS.

The quality of the coking coals at the Kodiak Project is also excellent with low ash, low sulphur, and superior fluidity which are expected to attract premium prices and be highly sought after by potential offtake partners.

Robust Project Economics with Low Barrier for Market Entry

The Kodiak Coal Project has a number of key advantages such as high quality coal and existing infrastructure which lowers the barrier for market entry (low start-up capex). The PFS has delivered a robust development plan, which provides confidence that work can now commence on a BFS. Next steps include improving the preparation yields and investigating potential sales of a middlings fraction; which could reduce operating costs further and improve revenues.

We have used the information from the PFS to update our valuation, which has added mine life, lowered costs and provided a better estimate on capex. Our updated NAV for Attila is now $1.96/s (up from $1.71/s).

We continue to recommend the Company as a Speculative Buy with 12-month price target of $2.00/s. With only a short time frame expected before the BFS is released (potentially late Q1 CY2014), Attila is well positioned to be in early production, generating solid cash flows.