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Coalspur And CN Agree On Key Supply Chain Terms Logistics' Costs For Vista Project Finalized

Stocks in this article: CPT

  • Coalspur and CN enter binding legal agreement outlining key terms for a definitive commercial agreement for our coal supply chain partnership
  • Terms agreed include rates, term and escalation
  • Final terms agreed with CN produce logistics savings at full capacity (12.0 Mtpa) compared with the Vista Feasibility Study
  • Total logistics costs, which comprise approximately 50% of Vista's estimated FOB cash cost, are now certain
  • Vista's total FOB cash costs for the first 10 years of production are under C$60 per tonne, ensuring Coalspur is well placed to weather the cycles in thermal coal markets

CALGARY, Dec. 14, 2012 /CNW/ - Coalspur Mines Limited ("Coalspur") (ASX: CPL, TSX: CPT) is pleased to announce that it has agreed on binding key terms (" Key Terms") for the definitive commercial transportation agreement with CN (" CN") (TSX: CNR) (NYSE: CNI). The Key Terms agreed with CN for Coalspur's Vista Coal Project (" Vista") now complete the logistics costs for Vista.

Coalspur and CN have agreed on an innovative seven year commercial contract that forms the foundation for a collaborative coal supply chain for Vista. At full production of twelve million tonnes per annum (" Mtpa"), the agreement with CN will enable Coalspur to achieve savings in total logistics costs from the Vista Feasibility Study released in January 2012.

Coalspur President and CEO, Gill Winckler said, "Securing these key terms of the rail agreement with CN is an important milestone for us, providing certainty around our logistics costs and confirming the strong business relationship that we are building with CN. The agreed terms effectively recognise the scale of the Vista operation and will reduce our projected total FOB operating cost to deliver savings of approximately C$20 million per annum over the first five years of production as compared to the Vista Feasibility Study.

Vista's cost risk profile has now been substantially reduced as we have locked in approximately 50% of Vista's estimated FOB cash cost. Coalspur now projects total FOB costs to be approximately C$57 per tonne in the first five years of production and below C$60 per tonne in the first ten years of production, which will ensure we are able to weather the cyclical nature of thermal coal markets."

Commenting on the agreement reached with Coalspur, Jean-Jacques Ruest, CN Executive Vice-President and Chief Marketing Officer, said, "CN is pleased to have reached this agreement with Coalspur, which helps advance the Vista project. Our comprehensive supply chain approach to managing the flow of coal from mines to west coast terminals improves transparency of the process and improves coal logistics and customer service. We expect Coalspur will also benefit from this end-to-end view of our coal supply chain when production commences in 2015."

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