Coal

[Arctec]

Shazam! Canaccord Adams has increased its coal price forecasts. Australian newspaper The Age reported last week that
Canadian juniors are settling interim 2008 coking coal prices of US$225/t for coking coal and US$190/t for PCI coal:
"Provisional price settlements are made by the smaller coking coal producers when there is no benchmark agreement between
the big producers and steel makers, as is currently the case. The provisional settlements revert to the benchmark prices once a
deal is struck. The expectation is that after a provisional price is set, the benchmark price will generally be higher." While the
details have not been confirmed to us by any of the junior coal companies, we are inclined to believe it is probably true. The
same newspaper article reported trade press rumours that Xstrata is demanding US$300/tonne. Benchmark price negotiations
between the major suppliers and Asian steel mills are dragging. Canaccord Adams is increasing its benchmark 2008 coal year contract price forecast by 30% to US$250/tonne (up from US$175/tonne) or hard coking coal and by 52% to US$190/tonne (up
from US$125/tonne) for ULV PCI coal.