Interest in Sask Coal Properties Growing
By David Friend
19 Jun 2008 at 12:05 PM GMT-04:00
resourceinvestor.com
TORONTO (CP) -- A trio of announcements from Western Canadian companies on Thursday highlighted the growing interest in Saskatchewan-based coal properties, which one executive likened to a “modern-day coal rush.”
Three companies - WestCan Uranium Corp. [TSX-V:WCU], Silver Fields Resources Inc. [TSX-V:SF], and Cloudbreak Resources Ltd. [TSX-V:CDB] - all said they've made applications for additional coal permits in the province, Canada's third-largest producer of coal.
Several other companies, including Kent Exploration Inc. [TSX-V:KEX] and Canasia Industries [TSX-V:CAJ] said earlier this week that they've filed their own applications.
The rush of filings come after fellow miner Goldsource Mines Inc. [TSX-V:GXS] came across coal while drilling the area for diamonds.
“From what I understand, people had found coal in the past but it was deep. This is 80 metres down and its about 25 metres of continuous hard coal,” said Goldsource's investor relations representative Fred Cooper.
“That's significant, that's not just a little pod.”
Goldsource said Tuesday it has received 55 coal permit certificates and plans to drill seven holes in the coming months.
“The ministry office in Saskatchewan is overwhelmed with claim submissions and is working extremely hard to grant them on a timely basis,” Cloudbreak Resources said in a release.
The company said it has applied to obtain a full-interest in 198 coal dispositions in the Pasquia Hills of east-central Saskatchewan.
WestCan and Silver Fields, both headed by president Chris England, have submitted their own applications around Prince Albert, Sask.
“The recent discovery of coal deposits in east-central Saskatchewan has resulted in a 'coal rush' with much of the available properties being targeted for permits,” England said.
“WestCan's management has become very selective in acquiring additional properties.”
Coal prices have skyrocketed over the past year as developing nations like China drive up demand. Both steel production and forms of electric power generation require coal as a form of fuel.
In April, the price of premium grade hard coking coal tripled out of the Port of Vancouver, hitting US$300 per metric tonne, driven partly by higher crude oil prices.
“That is generally percolating through the entire energy index now and raising prices” across the board, said Patricia Mohr, a commodities researcher at ScotiaCapital.
She said buyers have been looking for alternative ways to get coal product because of infrastructure constraints in Australia, the world's largest coal exporter.
Earlier this year, monsoon rains flooded a lot of the country's coal mines, and both railways and port facilities haven't been able to keep up with transporting the high coal demand.
But Ron Coll, an analyst at Jennings Capital Inc. was skeptical about whether Canada offers the best solution.
He covers Australian coal companies, but not Canadian firms, and suggests that the distance between Canada and key coal markets like China and India poses a problem.
“The transportation side of moving coal is really important,” he said.
“You can mine coal for $20 or $30 a tonne, but if it's going to cost you $50 or $60 a tonne to transport it to salt water and then get it to your market you're sort of beating your head against the wall.”
Kent Exploration president Graeme O'Neill said it's too early to tell what the future of the properties will mean to the companies.
“There may be a need for more coal-fired plants in our local places,” he said.
“I know people think it's dirty but technology has advanced and in my opinion you can create clean-burning coal-fired plants.” |
