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FORDING CANADIAN COAL TRUST $24.06 (Toronto symbol FDG.UN; SI Rating: Average) holds a 60% interest in Elk Valley Coal in B.C., the world’s second-largest supplier of metallurgical coal, a key ingredient in steelmaking. Elk Valley supplies approximately 21% of the global market.

Fording has vast reserves of coal. Mining could continue at current rates for 25 years; with further development, its reserves could last 100 years.

In the three months ended September 30, 2006, Fording’s revenues fell 20.8%, to $451.8 million from $570.8 million. Cash flow per unit fell 44.9%, to $0.92 from $1.67.

Of course, the company’s cash distributions rise and fall with coal prices and with the volume of coal sold. For instance, the company will pay a fourth quarter distribution of $0.95 a unit, up 18.8% from $0.80 in the third quarter. That payment was down from $1.00 a unit in the second quarter. The new annual rate of $3.80 yields 15.8%. Fording is deferring some capital projects, and cutting capital expenditures by 20%, to $40 million. This should free up cash to support its currentdistribution rate.

Fording is still a buy.

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