Argonaut recently visited Atrum Coal’s (ATU) Elan premium hard coking coal (HCC) project in Alberta, Canada. The scale of this project and extensive strike of coal bearing strata can only be appreciated from the air (in this case by helicopter). The site visit confirmed our view that Elan will likely host multiple mines, similar to Teck Resources tenure, which runs parallel to the west and generates US$3.8b EBITDA from four mines. ATU’s ability to attain environmental and mining permits, was the key risk being assessed on this site visit. Following meetings with legal advisors, regulators and Alberta provincial ministers, we came away with a high level of confidence that Elan will be a mining complex in the future. We believe that Elan’s scale, premium quality, high margin potential and location in a first world jurisdiction qualify it as a world class asset. SPEC BUY recommendation maintained.
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