Industrial Metals

Notes from the Floor: Coal Association of Canada Conference

Industrial Metals
Coal Investing

Day one of the Coal Association of Canada Conference began on June 9th at the Westin Bayshore Hotel in Vancouver, BC.

Day one of the Coal Association of Canada (CAA) Conference began on June 9th at the Westin Bayshore Hotel in Vancouver, BC.
With the coal industry struggling over the last year or so—in Canada and worldwide—Robin Campbell, president of CAA, said in a statement that the purpose of the presentations and discussions were to explore the challenges and opportunities the struggles present for the global and Canadian coal industry.
The Investing News Network (INN) was on the floor for part of the day, sitting on the second session that focused on North American producers and how the outlook for coal production on the continent looks for the future.
There were several presentations on the US and Canadian coal markets, one of which was Atrum Coal (ASX:ATU). Here’s a look at the company, and why it’s planning to build a new coal mine despite the current weak coal pricing environment.

Who is Atrum Coal?

Although Atrum is an Australian listed company, it is developing anthracite mines in Canada. Robert W. Bell, Atrum Coal’s executive chairman, gave the presentation on behalf of the company, a metallurgical coal explorer and developer with significant coal position in British Columbia.
Despite rocky times in the coal mining industry, Bell told the crowd that Atrum is “going to build a coal mine.”
“It’s a tough time in the industry today, it really is, but we’ve got a fascinating niche project,” he said. “We’ve got a lot of interest in it, and we intend to build.”
Bell noted the coal mine they’re working on is an anthracite mine, which he described as being “very different” from other types of coal.
Atrum noted that British Columbia is a favourable location for its initial anthracite project due to its vast high quality anthracite coals, developed rail and port infrastructure, access to deep sea ports, competitive shipping distance to Asia, among other things.
Although Atrum has had three other projects, the company is currently focused on the development of the Groundhog Project.

What is the Groundhog Project?

The Groundhog Project, located in British Columbia, has the potential to become a large supplier of seaborne anthracite in a relatively short time-frame, according to Bell’s presentation. It has a mine life of 28 years.
In May of 2016, Atrum received a bulk sample permit and associated permits from the BC government. A total bulk sample size of 100,000 tonnes was approved for extraction by way of surface cut-and-cover and underground mining.
The project also now includes a staged approach to development, initially employing a low cost starter mine producing 880,000 tonnes per annum of ultra-high grade anthracite. Additionally, the continuous miner underground mine will allow Atrum to do the following, as noted in the presentation:

  • establish operations in the area, and prove the logistics chain
  • continue to develop long term and sustainable relationships with the Company’s aboriginal partners
  • establish customer channels
  • investigate alternative high value markets
  • generate early cash flows Groundhog North Mining

In a June 9 company release, additional updates not listed above for the Groundhog project included news that the company will be able to increase debt funding potential for the larger underground mini-wall operations and provide shareholder returns by leveraging greater debt servicing ratios from cash reserves.

Other CAA tidbits

Prior to Atrum’s presentation, held in the conferences second session of the day, others included ones from Brad Johnson from Teck Resources Limited (TSE:TCK.B), Ernie Thrasher from Xcoal Energy & Resources, and Hans Daniels on behalf of Doyle Trading Consultants.
As noted above, the coal industry is currently in the midst of tough times, but CAA president Robin Campbell said the coal industry doesn’t deserve its bad rap.
Campbell insists the industry is still relevant, despite low market prices, and it’s evident by the presentations given that the coal executives mentioned above agree. Nonetheless, it will be interesting to see how the coal industry fares over the next year. Investors will also no doubt be watching Atrum’s continued development of the Groundhog project.
Don’t forget to follow us @INN_Resource for real-time news updates!

Securities Disclosure: I, Jocelyn Aspa, hold no direct investment interest in any company mentioned in this article.


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