- Aston continues to develop Maules Creek project
- Recent share price gains see UBS downgrade on valuation grounds
- Macquarie retains Outperform, see Aston as a ripe takeover target

By Chris Shaw

Aston Resources ((AZT)) is developing the Maules Creek coal project in the Gunnedah Basin in New South Wales, the project one of the last undeveloped and significant multi-seam coal deposits in the region.

Maules Creek is expected to start production in the second half of 2012 and hit full production of 10.8 million tonnes in 2014, with output to be a mix of both metallurgical and thermal coal.

With no production at present, the quarterly report from Aston highlighted recent news flow, which included an increase in capex and working capital, an increase in operating costs and an increase in the expected met coal mix to as much as 84%, up from 57% previously.

Despite the lack of production the Aston share price has been strong of late, UBS noting the stock has gained 26% in July alone. At current levels the stock is now at a 7% premium to the broker's estimate of net present value.

While there is some justification for the current valuation given potential value accretive catalysts such as the selling-down of a further stake in Maules Creek, a port allocation deal and NSW government approval for the project, UBS has downgraded to a Neutral rating on valuation grounds.

In contrast, Macquarie has retained an Outperform rating on Aston, seeing the company as a ripe takeover target given the ever diminishing number of opportunities among listed Australian coal producers.

As Macquarie notes, the current M&A activity surrounding Macarthur