Montem Resources listed yesterday under the ASX code MR1. The current environment is not very coal friendly, but we are still strong believers when it comes to investing in the next generation of high quality hard coking coal assets.
Montem, along with Atrum Coal are two listed companies in this area around the Crowsnest Pass in Alberta, Canada showing great promise with their exploration assets. This area is in a unique position to be a new, large Tier 1 Hard Coking Coal producing region. Our view is that in the next decade this whole area will be opened up as a new, high quality coking coal producing area with the potential to supplant some of the declining grades of coking coal from areas like Australia’s Bowen Basin. Given the very low stripping ratios being found here at Atrum’s Isolation South area and expected to be found in Montem’s Isola and Four Stack areas of similar geology, the production costs should be on par if not better than, global first quartile cost metallurgical coals, and the proximity to Vancouver gives a path to large Asian Mills desperate for more geographical and company diversification away from major Australian producers such as BMA who dominate the market and pricing.
We still see a strong demand profile for metallurgical coal given the world requirements for steel and the timeframes it will take for new steelmaking technologies to supplant existing blast furnaces run on coke. You can’t build gigafactories or make EV’s without steel, at least not on the scale that will be required over the coming years and for the prices demanded by the majority of consumers. While the push at the moment is for a strong anti-coal agenda, regardless of use, the reality is that consumer demand for steel in everyday use is still strong and will continue to drive the demand profiles supporting strong metallurgical coal prices moving forward. That makes high quality assets such as Montems and Atrums front of mind for future competitive development.
