Atomic Resources: Management team given a strong boost as it...

Atomic Resources: Management team given a strong boost as it advances towards mine production

January 13, 2011

Gold and Minerals Gazette
Mark Fraser

International coal veteran Graeme Robertson had some sound reasons for investing in ASX-listed energy player Atomic Resources Ltd.

For a start, the junior has significant thermal coal assets in Tanzania a democratically stable African growing nation which is keen to see the development of the company?s Ngaka project in order to help meet its own increasing domestic electricity needs.

Secondly, being situated relatively close to Africa?s east coast means the company has access to India, one of the world?s largest energy markets.

Thirdly, Atomic?s assets are fundamentally sound, providing one of the most intriguing investment opportunities currently available on the Australian bourse.

During late November, Atomic announced that Robertson had become its chairman following a $5 million capital
raising involving the issue of just over 22.7 million shares to the coal veteran?s nominated companies of Aspac Mining Ltd and Farjoy Pty Ltd.

Welcome arrival

His decision to take a stake in the junior did not go unnoticed, with Alto Capital Research telling investors that the appointment ?will greatly assist (the company) as it transitions from explorer to producer?.

?(Robertson?s) past experience in Africa and particularly his extensive knowledge of the global coal industry will prove to be invaluable,? the investment advisor noted.

In a previous life Robertson was the developer and chief executive of PT Adaro Energy Tbk in Indonesia, a company which eventually operated the largest open cut coal mine in the Southern Hemisphere.

He was also the managing director of New Hope Corporation Ltd from 1987-2005. Later, in 2010, he was awarded the Coaltrans Lifetime Achievement Award for his contribution to the sector.

Just before his appointment as chairman of Atomic, Robertson told a small gathering in Western Australia that he was fairly clear about where the company was going and what its abilities were.

?My main focus is getting into production because I don?t see the point in having coal in the ground it?s just a waste,? he said.

?And again I like to see production because it saves poor suffering shareholders from having to fund exploration.?

Impressive inventory

As it stands, Atomic?s most advanced project is Ngaka, a thermal coal development which sits within the Ruvumu District in Tanzania?s south west some 1,100 kilometres from the country?s capital of Dar es Salaam.

Mbalawala, located in the southern portion of the Ngaka Coalfield, has a JORC-compliant resource of 250 million tonnes (measured 139 Mt, indicated 66 Mt and inferred 46 Mt) as well as a proven reserve of 40 Mt.

Furthermore, total coal resources at Ngaka are expected to rise to over 400 Mt in the near term. All of Atomic?s energy assets in Tanzania are held through Tancoal Energy Ltd, in which its 85%-owned subsidiary Pacific Corporation East Africa has a 70% stake.

Tancoal plans to develop Ngaka in three stages, with the first phase involving the production of 150,000t in 2011 before ramping up to 1 Mt per annum by 2013 in order to satisfy both local demand and that of neighbouring countries.

Meanwhile, stage two consists of supplying 1.5 Mtpa to a proposed 450 megawatt power station. This development has already been subjected to bankable due diligence and deemed commercially viable. Production during this phase is expected to begin in 2014.

Finally, the third step will involve the exporting of 5 Mtpa of thermal product through either the ports of Mtwara or Nacala, with Robertson saying India would be the prime market.

?That?s how I see the future for Tanzania,? he noted.

Impost lamented

In addition, Robertson believed there would be further foreign investments made in the Africa?s coal sector and suggested some of the likely players would be Australian outfits not wanting to be hit by the Federal Labor Government?s current plan to introduce a minerals resources rent tax.

?Australia I don?t know ? the stupidity of governments I don?t subscribe to,? he bemoaned.

?One of the great things probably in Australia that occurred was the evolution of the superannuation scheme, which gave the country vast amounts of savings which could be utilised in its development.?

?And now the government?s stripping the cash that?s being generated out of the mining industry to pay for its ill begotten projects and their interesting failings, and I don?t see that as a proper swap.?

?So I would say that the overseas mining development and witness the number of Australian companies in Africa
is huge.?

?Everyone is going to Africa it?s a new frontier, it?s exciting and it?s got all of the potential, without the headaches if structured correctly, one could have with Australian mining.?

?That?s not to say that you can?t make profits (in Australia) ? you can make very good profits in Australia you?ve just got to let more of them go to government and less to your shareholders.?