SOURCE: Waratah Coal Inc.

December 07, 2006 08:30 ET

Waratah Coal -- a New Coal Explorer and Developer -- Lists on TSX-V

VANCOUVER, BC -- (MARKET WIRE) -- December 7, 2006 --Eaglestar Ventures (TSX-V: EGL.P) / Waratah Coal Inc. (TSX-V: WCI) (the "Company") is pleased to announce the closing of the transaction constituting its Qualifying Transaction (the "Acquisition") under the Policies of the TSX Venture Exchange ("TSX-V") and the change of the Company's name to "Waratah Coal Inc." Waratah Coal is focused on exploring and developing coal deposits in Australia, where it has been granted 4 exploration licences and has applications in progress for another 13 licences. Waratah Coal also plans to accelerate new project investigations, both within Australia and in the Australasian region. Global demand for both thermal and metallurgical coal has increased along with global economic growth and the increased application of clean-coal technology and Waratah is well-positioned to advantage of these trends.

The Acquisition

Pursuant to the Acquisition, the Company acquired all of the issued and outstanding securities of Waratah from their current holders for aggregate consideration consisting of 20,350,000 common shares and 1,250,000 special warrants of the Company, issued at a price of $0.50 each and 5,000,000 share purchase warrants. Each special warrant will be exercisable without payment of additional consideration for one common share of the Company. Each share purchase warrant entitles the holder to purchase one common share of the Company at a price of $0.50 per share for a period of two years following the closing of the Acquisition.

Concurrent Financing

Concurrent with the closing of the Acquisition, the Company will close a private placement of 6 million units at a price of $0.50 per unit to raise gross proceeds of $3 million (the "Financing"). Each unit consists of one common share of the Company and one half of one share purchase warrant, with each whole warrant entitling the holder to acquire an additional common share of the Company at a price of $0.75 per common share for a period of 18 months following the closing of the Acquisition.

The Financing was completed on a partially brokered basis, with 1,000,000 units being placed by Golden Capital Securities Inc. (the "Agent"). The remaining 5,000,000 units were placed on a non-brokered basis. The Agent received a commission of $30,000 payable in cash, and was granted non-transferable warrants entitling it to purchase 100,000 common shares at a price of $0.75 per common share for a period of 18 months following the closing of the Acquisition. Finder's fees of approximately $141,400 were paid on a portion of the non-brokered financing, and finders were issued a total of 323,200 warrants having the same terms as the Agent's warrants.

Escrow Transfer

Concurrently with the closing of the Acquisition and the Financing, 1,000,000 of the escrowed common shares of the Company owned by the principals of the Company were sold to Longview Capital Partners Incorporated ("Longview") at a price of $0.10 per share. The 1,000,000 escrowed shares sold to Longview will continue to be held in escrow pursuant to the terms of the existing escrow agreement between the Company, the vendors of the shares and Pacific Corporate Trust Company.

About Waratah

Waratah Coal's strategy is to build shareholder value through acquisition, exploration and development of coal projects in Australasia. This strategy has been developed by a synthesis of Waratah's core skills in project evaluation, structured acquisition, exploration and project development and operations, an area where Waratah executives have significant experience.

Waratah believes that the following strategies will return significant value for shareholders:

* Most important is the application of high-volume, underground mining techniques to deep metallurgical coal resources. Waratah has a competitive edge in applying these techniques to underground coal exploration and development, given its executive experience in that area.

* Waratah believes it can build resource tonnage based on the identification of previously-unrecognized metallurgical coals in an environment of growing demand.

* The Company also believes that continued high energy prices have increased the potential for a significant coal-to-liquids operation for one of its project areas.

* Waratah's exploration team is well-advanced in the search for new concealed and previously unidentified coal-bearing sedimentary basins. Queensland hosts examples of very large coal mines and resources such as Blair Athol and Wolfang which exemplify this type of deposit in a concealed basin.

Waratah currently has four granted coal exploration licences, three in Queensland and one in New South Wales. In addition to the granted licences the company has another thirteen coal exploration licences under application -- ten in Queensland and three in the Northern Territory.

Operationally, Waratah will focus initially on the successful completion of exploration programs on its granted licences. The highest priority will be a program of 16 deep drillholes on the Styx Basin Project. The Styx Basin is located on the Central Queensland Coast, mid way between Mackay and Rockhampton. The project covers a structurally controlled sedimentary basin from which high energy cretaceous coals were mined until 1964. Government records show the existence of metallurgical properties in some of the seams. Previous coal and gas exploration has indicated aggregate coal seams up to 14 metres thick, including coal seams below the known mined levels. Waratah Coal intends to explore for a target resource of metallurgical coal down dip of the old workings and in poorly-tested lower seams below existing mined seams. The potential to apply modern underground mining techniques and the location of the project on the main north-south rail line provide the Styx Basin with added attraction.

In addition to the Styx Basin, Waratah Coal holds an exploration licence over the Nymboida Project, in the north east of New South Wales. Like the Styx Basin project, Nymboida was an historic underground coal mine which was worked up until 1979 supplying high energy coal for a local power station. The operation was closed when the small-scale local power station was replaced by connection to the main state power grid. Mining operations at Nymboida were conducted on the Farquar Seam, which was recognised at the time as one of the highest energy coals in New South Wales, due to the coal's excellent metallurgical properties. Waratah Coal has conducted detailed field mapping which provides encouragement for a drilling program on a 1-kilometre spacing to test the strike potential of the Farquhar Seam to the northwest and southeast of the old mine. Due to the location of the project, it s proximity to existing infrastructure and the quality of the historical coal resources, Waratah believes that even a moderate metallurgical coal resource target would be an attractive asset.

Waratah Coal has also taken a large exploration position in the eastern Galilee Basin in central Queensland. The company has four applications and one granted licence, South Alpha. South Alpha is located west of the Bowen Basin, one of the most productive coal mining basins in the world. The Galilee Basin is attractive due to the presence of five relatively continuous seams dipping very gently to the west. The seams are reported to contain high quality thermal coal, low in sulphur and ash after washing. The Waratah Coal licence area surrounds an existing resource historically reported to contain 2.1 billion tonnes (Queensland Coals, 14th Edition, 2003, Department of Natural Resources and Mines). The area is regarded as being structurally undisturbed and the high continuity of the seams indicates there is good potential to identify a very large resource of high quality thermal coal. Waratah believes the considerable tonnage potential in the area would warrant the development of high volume infrastructure which would be required to transport any product to the coal export facilities at Gladstone on the central Queensland coast.

In addition to attraction of the Gallilee project as an export coal opportunity, previous testing has identified the coal as one of the most suitable in Australia for a coal-to-liquids processing. Waratah Coal plans a 2-kilometre-spaced drilling program to outline the scope for a significant resource of potentially-commercial coal.

The forth granted licence covers the Stanwell project, located immediately north of the Capricorn highway opposite the Stanwell Power station in central Queensland. The Stanwell project is based on exploration for concealed coal basins. Queensland hosts examples of very large coal mines and resources such as Blair Athol and Wolfang which exemplify this type of deposit in a concealed basin. The majority of coal mined today is from projects exhibiting simple and easily recognizable outcropping geological features. A core element of the Waratah Coal exploration strategy is to identify hidden coal basins which may have been difficult to recognize in the past due to the presence of overlying volcanics and alluvium. The Stanwell project is located on an anomalous gravity low which to date has not been drill tested.

It is expected the remaining applications will be granted over the ensuing six months. Waratah Coal is in the process of recruiting a skilled exploration manager to oversee the existing projects while generating additional opportunities through application for additional prospective areas.

Waratah Coal has commenced a targeted project investment strategy within the Indonesian province of East Kalimantan. Waratah believes Indonesia will likely overtake Australia as the largest exporter of coal products and accordingly regards it as a key part of the Company's development strategy. In 2005, Indonesia exported more thermal coal than Australia, and Waratah believes this trend will continue, based on the large resource base in East Kalimantan, and the proximity to the strongest-growing coal importers such as China, India, Japan and Taiwan.

Waratah Coal intends to add to its exploration-based growth strategy by actively pursuing project review and acquisition activities and internal strategic review processes to identify attractive merger and acquisition targets. Management believes there is still potential to find underperforming assets and projects where the true upside potential has not yet been recognized. Significant additional value may also be generated by applying the operational experience of Waratah Coal executives. The successful identification and investment in such projects could see a positive cashflow achieved at an early stage, significantly accelerating the growth of the company.

Corporate Matters

In connection with the Acquisition, Bruno Gasbarro, Blair Holliday, Jatinder Singh Bal, and Salvatore Giantomaso have resigned from the board of directors and all previously held positions as officers of the Company. Mr. Damien Reynolds, Nicholas Mather, and Peter Lynch have joined the Board of Directors. Mr. Lynch has been appointed as President and Chief Executive Officer.

Please refer to the Company's November 14, 2006 Filing Statement for further information about the Company and Waratah, and for further details respecting the Acquisition, Financing and related transactions. A copy of the Filing Statement is available under the Company's profile at www.sedar.com.

On behalf of the Board of Directors,
"Peter Lynch"
President, Chief Executive Officer and Director

These securities have not been registered under the United States Securities Act of 1933 (the "US Securities Act") or the securities laws of any state, and may not be offered or sold in the United States or to US persons (as defined in Regulation S under the US Securities Act) unless an exemption from registration is available.

The TSX Venture Exchange has not reviewed and does not accept responsibility for the adequacy or accuracy of this release.

Contact Information

  • For further information please contact:
    Peter Lynch
    Telephone: +61 7 3303 0692
    Email: Email Contact