Quarterly OverviewDuring the March quarter commodity and junior equity markets remained challenging. In response, Stanmore Coal Limited ("Stanmore Coal" or "the Company") has focused its attention on its two key projects (Belview and the Range) and limited further expenditure on other projects. Belview is a high quality underground coking coal project targeting significant production by longwall mining at a very competitive expected cost position. The recent share trading range for Stanmore securities is at or close to net cash backing per security, which the Company believes is unwarranted given the Company has:
· a diversified portfolio of high quality coking and export thermal coal projects;
· 94Mt of Marketable Reserves, 686Mt of JORC Resources and 975Mt - 1,498Mt of additional Exploration Targets 2,3
· secured 5Mtpa of capacity in WEXP1, but has not yet committed to a take or pay liability; and
· $29 million of available funds and has the ongoing support of its major shareholder Sprint Capital who wishes to capitalise on future growth opportunities in the coal sector through Stanmore Coal.
Finalisation of the Range Project Feasibility Study during the quarter confirms that the Range Project is an attractive 5Mtpa high quality, export grade, thermal coal project ready for execution upon the delivery of the Surat Basin Rail. State environmental approval for the project has been obtained and we expect that the Mining Lease will be ready for grant by the end of 2013.
The results of the Belview Project Concept Study were also released during the period and confirm that the acquisition of EPC 1186 has resulted in significant improvement to the underground mining potential of the Belview Project by providing a larger, shallower resource base which has reduced both operating costs and capital intensity.
The Company is well funded and well positioned to take advantage of any prolonged down-turn by reducing project capital and operating costs and selectively pursuing acquisition opportunities in conjunction with Sprint Capital.
The long term fundamentals of both the coking and thermal coal markets are strong, supported by increasing demand for coal in emerging economies including India and China. Management is working to ensure that Stanmore Coal emerges from the current downturn a stronger company and delivers long term value to its shareholders.
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