According to RBC Capital Markets:OutperformSpeculative RiskTSX:...

According to RBC Capital Markets:
Outperform
Speculative Risk
TSX: CPT; ASX: CPL
June 19, 2013
Coalspur Mines Limited
Additional Funding Required Despite Less Capex Needs
Impact: Mild positive.
First Impression
• Capex Reduction Due to Development Plan Change. Coalspur announced that its board-approved development plan will deliver a 6Mtpa clean coal capacity operation in one stage for C$458 million in capex, vs the prior two stage plan for C$655 million in capex. The C$458 million capex excludes mobile equipment as the company plans to use mining contractors, and the capital efficiency in the new plan is C$76 per tonne of capacity.
• Improvement in Development Process. The capex savings of C$197 million is the result of a modified execution strategy, the optimization of the mine and plant design, and efficient re-engineering of the materials handling infrastructure and process flowsheet. The company also noted that savings were possible due to reductions in raw material supply costs and construction inputs.
• Contractor Arrangements De-risk The Vista Project. Coalspur completed a front-end engineering and design process with selected contractors in the past few months and the terms agreed with the selected EPC contractor could de-risk the capital budget by locking in approximately 50% (US$221 million) of total development capital and also de-risk schedule to first production.
• First Production Expected in 2015. Coalspur is expected to commence construction of Vista in September 2013, following regulatory approval and shareholder approval of EIG and Borrowdale Park funding arrangements. The company is expected to conduct mining mobilization in early 2015 and deliver its first coal in mid 2015.
• Financing Requirement Still a Key. The US$350 million senior debt facility with EIG will provide approximately 80% of the total development capex to construct Vista Phase 1. Coalspur still requires approximately $100 million in funding. The company is confident of securing additional funding over the next 9 - 12 months by engaging a strategic partner, marketing or off-take related transaction.
• Investment Rationale: Coalspur is set to become one of the largest export thermal coal producers in North America through the development of the Vista Coal project. The project is strategically located in a well-developed coal mining region of Canada, has secured access to existing rail infrastructure and allocated ship loading capacity. The company is well positioned to commence construction of Vista in H2 2013, with first production targeted for 2015. We think that in the near term the company's $100M funding gap could continue to put pressure on the shares given challenging financial markets.

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