A bigger & better project, but likely to need more capitalGood...

A bigger & better project, but likely to need more capital
Good buying at these levels
h Coalspur has reported an $8.7m loss for FY10, compared to $1.9m
for the previous year. This is largely due to the higher corporate and
exploration expenses as the company ramps up the pace of
development at the newly renamed Vista project. The financial
position is still sound with the key element of cash on hand at $21m.
h Coalspur has undertaken an excellent consolidation of the coal
ground in its area. The new leases bring total resources for the
expanded project to 906Mt and makes Vista into one very large, very
long life asset. It is still one of the most attractive coal explorers on,
with the rare attribute of being only 3km from a rail line which has
spare capacity, going to a coal port that also has spare capacity.
h Coalspur is set to become a dual-listed company with a secondary
listing on the Toronto Stock Exchange (TSX). This is a compliance
listing, ie, it does not plan to issue new shares. We expect that it will
be well received by the investment community as there are few listed
coal entities in Canada and even fewer with such a large and
attractive project in the country itself.
h Coalspur expects to complete is Pre-feasibility study by the end of
Calendar 2010. The focus of the study will be the expanded and
continuous resource now available for a much bigger operating mine.
h We now wonder if after the TSX listing the company will be tempted
to raise additional equity to pay for the new leases rather than
drawdown on the Highland Park facility (a $65m debt facility with
interest of approx 10%pa repayable within 2 years from drawdown.).
We suspect that the recent softness in the share price reflects some
anticipation that CPL/CPT is cum a raising.
h It is early days, with first production not due till 2013, and still many
regulatory and approval hurdles to overcome, but the Vista project
has a combination of elements that is difficult to find elsewhere. Our
valuation fallen slightly due to dilution to $1.09 and accordingly we
maintain our BUY recommendation with a price target of $1.10 per
share.
GOODLUCK TO HOLDERS