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Fording Canadian Coal Trust Company News Alert Significant increase in common trust unit price Common Trust Unit
Ticker: Target price: Current price:

30 June 2008

HOLD

The Fording Canadian Coal Trust (Fording) common trust unit has appreciated significantly since our 1Q 08 update report, dated 14 May 2008, driven mainly by positive investor reaction to sharp rises in contract prices for the 2008 coal year. This is in line with our expectations. Therefore, as our target price no longer supports a BUY, we downgrade the common trust unit to a HOLD.

FDG_u.TO C$101.01 C$94.04 We will reassess our common trust unit rating for Fording after the company releases its 2Q 08 results on 21 July 2008. We continue to anticipate a positive currency impact on the NYSE trust unit over our investment horizon. Therefore, we maintain our BUY rating.

Price change since 31.3% previous report:

NYSE Trust Unit
Ticker: Target price: Current price:

BUY
FDG US$106.32 US$93.75

Price change since 31.7% previous report: Supervisor: Bhavesh Chauhan Analyst: Chaitali Paul Editor: James Smithies Global Research Director: Satish Betadpur, CFA Next news due: 2Q 08 results, 21 July 2008

We will reassess our NYSE trust unit rating for Fording after the company releases its 2Q 08 results on 21 July 2008.

Investment horizon - short term actionable trading strategies
This report addresses the needs of strategic investors with a long term investment horizon of 6-12 months. If this report is provided to you by your broker under the Global Settlement, you may now also access (free of charge) the short term trading outlook that we publish from time to time for this issuer, looking at the coming 5-30 days for readers with a shorter trading horizon. These are available online only at www.researchoracle.com.

In our 1Q 08 update report, dated 14 May 2008, we rated the Fording common trust unit a BUY on fundamental grounds, with a 6-12 month target price of C$101.01 and a potential upside of 41%. Since then, the common stock has increased 31.3%, in line with our expectations, mainly driven by positive investor reaction to sharply rising contract coal prices; these rises reflect soaring demand from the steelmaking industry. Fording's average coal price for the 2008 coal year (which commenced on 01 April 2008) is expected to be US$275.00 per metric ton, up from US$97.70 in the 2007 coal year. Furthermore, on 10 June 2008, Fording boosted its quarterly payment to unit holders, from C$0.5 per unit in 1Q 08 to C$2.50 per unit in 2Q 08, following the surge in coal prices. The rise in the common stock price is in line with our expectations. Therefore, as our current target price no longer supports a BUY, we downgrade the common trust unit to a HOLD.

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