Please see attached this mornings research note from Evolution on Altona Energy.

They have a 12-18 month price target of 34p, from a current share price of 8p.


Altona Energy (ANR.L) Buy
Price/Target: 8.13p/34.8p Mkt Cap: �29m Issued Shares 376m 3mth Avg.

Daily Vol.

1.8m Share cap.

traded/year 123% Net Cash/(Debt) (FY1) �0m
Altona Energys licences cover 2,500km2 of the Arckaringa coal basin in South Australia.

They are estimated to contain a JORC resource of 1.3bnt, within an overall deposit which could extend to about 7.8bnt.

The size of the deposit is important in a global context and it is this, and the amenability of the coal for Coal-to-Liquid transformation, which has attracted the attention of China National Offshore Oil Co (CNOOC).

We believe that the joint venture with CNOOC has transformed the outlook for Altona and the deposit will now be fast-tracked to production.

Buy.
Altona Energy and its joint venture partner, CNOOC, control three major coal deposits in the Arckaringa Basin of South Australia.

On a combined basis these deposits are thought to contain at least 7.8bnt of coal, of which about 1.3bnt has been estimated to updated JORC standards.

All of this coal is expected to be amenable to Coal-to-Liquid (CTL) transformation. The link-up with CNOOC and its New Energy Investment subsidiary (CNOOC-NEI) in November 2009 was a significant development for Altona.

It means that the group has secured the finance to push forwards with the bankable feasibility study for the project and secured a commitment to arrange the bulk of the funding that will be required for development. We believe that 2010 will be a transformational year for the group as it should see the publication of ongoing results from the study.

We expect this to lead to a reappraisal of the economic potential of the project and the companys ability to share in this upside potential.

The first tangible steps on this path are now being taken with the recent appointment of a Project Technology Executive. The latest valuation reference point was the completion of the CNOOC negotiations, at which point Altona was worth about 11p/share.

Completion of the bankable feasibility study lifts our valuation to about 35p/share and, as the operation moves closer to production, we see longer-term upside to 60p/share. We recommend purchases for both near-term and long-term capital appreciation. As the risks diminish the rewards should become more apparent.

Buy.
Paul Youens St Brides Media & Finance Ltd Chaucer House 38 Bow Lane London EC4M 9AY T: +44 (0) 207 236 1177 | M: +44 (0) 7989 384 551 | F: +44 (0) 207 236 1188 | www.sbmf.co.uk
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