Name and Location
Vista coal project, Canada.

Client
Coalspur Mines.

Project Description
The Vista coal project has marketable coal reserves of 313-million tons from a recoverable coal reserve of about 566-million tons.

The project envisages the development of a coal mine that produces an estimated 12-million tons a year.

The mine’s plan has been revised.

Phase 1 will be developed in two stages. The first stage will produce three-million tons a year of coal, with the second stage providing a further two-million tons a year of coal.

Phase 2 will add seven-million tons a year of coal production, taking the project to its ultimate design capacity of 12-million tons a year of coal.

Value
The estimated total net funding is C$841-million.

Duration
The ramp-up to full capacity will now be more than five years, as opposed to four years indicated in the feasibility study, with full production expected to be reached in 2019.

Latest Developments
Coalspur will during the remainder of this year and part of next year conduct a strategic review of funding options for its Vista project.

The review will consider alternatives such as securing full funding for the project, the sale of all or a portion of the company’s assets, the formation of a joint venture, a possible merger or the outright sale of the entire company.

Refinancing and recapitalisation will also be investigated.

At the end of May, Coalspur expressed concern over its ability to develop the Vista project, as the depressed coal price environment affected the company’s ability to raise sufficient capital.

The company told shareholders that a special committee of the board of directors would oversee the strategic review, the results of which would only be made public once the board of directors had approved a specific transaction, or determined that disclosure was necessary.

Meanwhile, Coalspur’s current financier EIG Global Energy Partners has determined that the final size of its overall debt facility will be $175-million.

However, Coalspur president and CEO Gill Winckler has pointed out that the facility will not be sufficient to fully fund the Vista project in the current thermal coal market, and as a result, the company will repay its current debt with EIG before the end of March next year.

“When the EIG facility was executed in April 2013, the market conditions were such that a facility of up to $350-million was attractive for the development of Vista. Continued softness in thermal coal markets has clearly had an impact on the whole industry and on the amount of the project funding EIG can support at this point in time,” Winckler says.

Coalspur recently drew down an additional $10-million in funding through its existing senior debt facility with EIG, allowing the company working capital to progress Vista and to initiate the strategic review.

The additional funds will be used to secure the final licences and permits for Phase 1 of the Vista project, and finalising the engineering, procurement and construction contract, as well as entering into a five-year mining contract with project house Thiess.

The funds will also be used to advance key elements of work around Phase 2 of the project.

On Budget and on Time?
Coalspur initially planned to start construction at Vista in September 2013, but it had to delay activities while awaiting development approval. Regulatory approval had initially been scheduled for the end of June 2013, with project completion planned for mid-2015, but the AER received several statements of concern against the Vista project.

Contact Details for Project Information
Coalspur Mines, tel +1 403 261 9997 or fax +1 403 767 6378.