Atlantic Coal (ATC) BUY Maintained
7 December 2009 Current Price: 0.7p Market Cap (M): �9.7 Mining 12 month target �0.025 EV (M): �12.4
Event Atlantic Coal has announced that it hasentered into a non-binding memorandum of terms to acquire the entire issued and to be issued capital of Maple Carpenter Creek (MCC).
Comment MCC is a Montana based clean burning coal development company with over 380M tons of coal resource (controlling surface rights and mineral rights) in prime coal mining territory.

It also has access to existing transportation infrastructure which provides a direct line to key coal markets in the US and Asia.

The Proposed Transaction is part of the Companys strategy to expand its asset base and production, by leveraging its cash flow from the producing Stockton Coal Mine in Pennsylvania.
The current plan is to issue the shares in five tranches.

The first would be 461M shares to occur when due diligence is complete and the signing of the purchase agreement occurs.

This would be followed by 5 stages.

It is only on completion of all five stages that the total number of shares, 1,330,689,665 would be issued.

It is believe that this would take two years to achieve.
All going well, some of the senior management from MCC will join Atlantic Coal with Nick Shakesby, joining the Atlantic Coal board.
This presents an opportunity for Atlantic Coal to enter the low sulphur thermal high BTU coal market through the acquisition of one of the last remaining surface mineable deposits of this type available in the USA.

It also offers a scale of mining that is significantly above its current anthracite operations.

The opportunity is enhanced by the recent passing of the USs "Clean Coal Act" and an increased oversight on mountain top mining.
Recommendation We retain the Buy recommendation with the target price modestly increased to �0.025, previously �0.024/share.

The increase in the target price is due to a lower exchange rate, 1.64 and previously 1.67, now being used to convert the US$ target price into sterling.
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