Metallurgical Coal Market

CPCM’s interest in the property comes from its deep understanding of the coking coal market. It is the supply demand balance looking forward that is signalling the need for additional supplies to support the world steel industries . Coking coal is an essential ingredient in modern BOF steel making and no substitutes are available. Industry analysis forecast a significant shortage of Coking coal, particularly high quality coking coal for which the Elk Valley is famous. This shortage is reflected in market pricing, the stimulus of new projects worldwide and in the purchase of existing producers and projects by long term industry players.

Western Canada is already a significant exporter of Coking Coal.

Metallurgical coal seaborne trade flows - Australia, US and Canada are major exporters" Western Canada is the second largest exporter of coking coal. It has logistic infrastructure capacity and in recent years has enjoyed stable weather patterns that have underpinned its reliability as a supply source."

CPCM’s Coal Creek Project is well positioned to become a solid and stable high quality metallurgical coal producerfollowing on from successful exploration and associated studies . Its location next to infrastructure in the Elk Valley alongside the existing facilities of Teck Coal are a key ataractive feature as major coal companies are increasingly looking to the western seabord and investing in outlets to the vibrant markets of Asia.

Analysis by Major Producers Suggests a Supply Crunch Ahead " The chemical and physical characteristics of metallurgical coal make it a rare natural commodity, with no substitutable alternative. Australia, the USA, and Canada, the traditional sources of world traded metallurgical coal, are struggling to keep up with demand driven by the steel intensive growth of the Asian Economies."

Price of coking coal has responded in acknowledgement of the existing and projected supply demand crunch.

The Coal Creek Project will provide additional product to hungry markets.

To keep pace with projected steel production, coal use will have to rise 600 million tonnes by 2020. Additional sources of premium coking coal will be needed to accommodate this increased demand.

The industry has recognised that there is a severe shortage of new capacity for high quality coking coal and the emerging sources do have significant infrastructure, quality and political risk challenges.