Swiss banking houses at odds over Aston

CREDIT Suisse does not expect Aston Resources to face any difficulties securing Newcastle port capacity for its flagship Maules Creek project in the Gunnedah Basin, while UBS expects project delays because Aston lacks a port allocation.

Blair Price

In a 56-page report last week, Credit Suisse forecast Newcastle’s port to reach 170 million tonnes per annum of capacity by the end of 2011, compared to 93Mt shipped in 2009.

With the second stage development of Newcastle Coal Infrastructure Group’s terminal approved to expand to 53Mtpa of capacity, Credit Suisse estimates at least 180Mtpa of total coal export capacity at Newcastle by 2013.

“Given reasonable visibility on New South Wales coal projects, we believe it [is] likely that port capacity will be available for Maules Creek coal,” Credit Suisse said.

The bank said Aston would need 1.6Mtpa of both rail and port capacity in financial year 2011-12 and 4.4Mtpa in 2012-13 to meet its initial ramp-up plans, and this was “very achievable”

Credit Suisse expects 7.9Mtpa of rail and port capacity to be required for the 2014 financial year and 10.3Mtpa for FY2015.

Despite these views, UBS expects the Maules Creek project to be delayed for four years to 2016 because Aston does not hold a port allocation according to The Australian.

UBS analyst Glyn Lawcock even suggested Aston could get around this issue by acquiring private New South Wales coal producer Donaldson Coal from commodities trader Noble Group through a scrip-based deal in this report.

This move would reportedly secure Donaldson’s second stage allocation of 6.5Mtpa from Port Waratah Coal Services’ planned Terminal 4 at Newcastle.

An Aston spokesman did not comment on the newspaper report of the analyst’s views.

The Maules Creek project is targeting 13Mtpa of raw coal for at least 21 years of open cut mining, with development scheduled to start in the December quarter of 2011.

Credit Suisse has given Aston an “outperform” rating and an $8 per share price target.

UBS reportedly set a “neutral” recommendation and a $6.50 price target.

Noble subsidiary Osendo owns a 4.8% share of Aston.

Aston shares closed down 5c to $5.75 yesterday – still below the initial public offering at $5.96 in August.