CanAm Coal Corp.

CanAm Coal Corp.

July 27, 2012 09:42 ET

CanAm Announces Intent to Exercise Its Option to Acquire an Additional 30% of Birmingham Coal & Coke and Private Placement

CALGARY, ALBERTA--(Marketwire - July 27, 2012) - CanAm Coal Corp. (TSX VENTURE:COE) (OTCQX:COECF) ("CanAm" or the "Company") is pleased to announce that CanAm is exercising its option to acquire an additional 30% ownership interest in its principal U.S. mining operations (the "Transaction") for a purchase price of US$11,505,682. The Transaction will be completed through the purchase of additional equity interests in the capital of Birmingham Coal & Coke Co., Inc and Cahaba Contracting & Reclamation LLC (collectively referred to as "BCC") under an existing option and will be effective as of July 1, 2012.

The Company will fund the acquisition through a non-brokered private placement offering (the "Offering") of a minimum of 12,000 and a maximum of 16,000 units ("Units") at a price of CDN$1,000 (and/or its US dollar equivalent) per Unit for total proceeds of a minimum of CDN$12,000,000 and a maximum of CDN$16,000,000. Each Unit will be comprised of a $1,000 principal amount of 9.5% non-convertible and unsecured debentures ("Debentures"), 1,250 2012 series A common share purchase warrants ("Series A Warrants") and 1,000 2012 series B common share purchase warrants ("Series B Warrants"). The Series A Warrants have an exercise price of CDN$0.20 and a term of four years, and the Series B Warrants have an exercise price of CDN$0.25 and a term of four years.

"The exercise of our 30% option is another significant step for CanAm and brings our goal of 1 million tons of annual production one step closer. With completion of the Transaction, we expect 2012 production to be in the range of 450,000 to 500,000 tons with 2013 production in the range of 750,000 tons with substantially all production contracted to existing customers. The fact that we were able to finance the transaction on reasonable terms in a difficult credit environment speaks to the underlying quality of the BCC asset and the strength of our long term business plan." said Jos De Smedt, President and COO of CanAm. "Increasing our ownership in BCC and further investing in a management team that has a proven track record of safe, reliable and profitable operations makes perfect sense at this time," added Tim Bergen, CEO of CanAm.

Radar USA, a wholly owned subsidiary of the Company, acquired 50% of the outstanding equity interest in BCC in May 2011 (the "Original Transaction"). Pursuant to the Original Transaction, Radar USA was granted an option to acquire the additional 30% interest being acquired in the Transaction and the remaining 20% interest until May 9, 2016. The Vendors of the Transaction, Robert A. Lewis, Thomas A. Lewis and R. Wayne Bass (the "Vendors"), will be paid an aggregate purchase price of US$11,505,682. Upon completion of the Transaction, the Company will own 80% of BCC and the Vendors will own 20%.

The aggregate purchase price will be paid by US$5,505,682 in cash and the issuance of Debentures in the Offering, in an aggregate principal amount of US$6,000,000 together with 7,500,000 Series A Warrants and 6,000,000 Series B Warrants. The exercise of the Series A Warrants and Series B Warrants issued to the Vendors is subject to disinterested shareholder approval which the Company intends to seek at its next annual general meeting.

Each of Robert A. Lewis and Thomas A. Lewis is a director and senior officer of BCC and therefore may be considered to be a non-arm's length party within the meaning of the policies of the TSX Venture Exchange (the "TSXV"). R. Wayne Bass is neither a director nor an officer of BCC and would not be considered to be a non-arm's length party.

Certain directors and officers of the Company are expected to subscribe under the Offering for approximately CDN$2.2 million aggregate principal amount Debentures, an aggregate of 2.8 million Series A Warrants and an aggregate of 2.2 million Series B Warrants.


The completion of the Transaction and the Offering is subject to certain conditions including acceptance of the Transaction and the Offering by the TSXV and other conditions customary for transactions similar in nature to the Transaction. There can be no assurance that the Transaction or the Offering will be completed as proposed or at all.

Provided that the conditions to completion of the Transaction and the Offering are completed to CanAm's satisfaction, the Company anticipates that the closing of the Offering and the Transaction will be on or about July 30, 2012.

About CanAm Coal Corp.

CanAm is a coal producer and development company focused on growth through the acquisition, exploration and development of coal resources and resource-related technologies. CanAm's main activities and assets include its four operating coal mines in Alabama and the Buick Coal Project which holds significant coal resources, 188 million indicated and 103 million inferred resources, in Colorado, USA (see the technical report entitled "Limon Lignite Project, Elbert County, Colorado, USA," dated October 26, 2007 and filed on SEDAR on November 2, 2007). Other coal and related opportunities continue to be evaluated on an ongoing basis.

About Birmingham Coal & Coke, Inc.

Incorporated in 1975 by H. Kent Lewis, BCC started as marketer of coal produced from mines located in Alabama to industrial, utility and export markets. Since then, BCC has grown to become a significant Alabama coal producer. Based on a foundation of prudent financial stewardship, safety and strong ethical values, BCC is one of only three coal mining companies operating in Alabama in 1975 that still exists today; the others being Drummond Coal Company and Jim Walter Resources. In May 2011, pursuant to the Original Transaction, CanAm acquired a 50% ownership interest in BCC.

Forward-Looking Information and Statements

This press release contains certain forward-looking statements and forward-looking information (collectively referred to herein as "forward-looking statements") within the meaning of applicable Canadian securities laws. All statements other than statements of present or historical fact are forward-looking statements. Forward-looking statements are often, but not always, identified by the use of words such as "could", "should", "would", "can", "anticipate", "estimate", "expect", "believe", "will", "may", "project", "budget", "plan", "sustain", "continues", "strategy", "forecast", "potential", "projects", "grow", "take advantage", "well positioned", "intends" or similar words suggesting future outcomes. In particular, this press release contains forward-looking statements relating to: the future production of the Powhatan mine and BCC's mines; the Company's goals relating to production; the Transaction and the expected timing for completion thereof; the Offering and the expected timing for completion thereof; and the Company's intentions with respect to seeking disinterested approval for the exercise of the Series A Warrants and the Series B Warrants issued to the Vendors at its next annual general meeting. This forward looking information is based on management's estimates considering typical strip mining operations, equipment requirements and availability and typical permitting timelines.

In addition, forward-looking statements regarding the Company are based on certain key expectations and assumptions of the Company concerning anticipated financial performance, production, business prospects, strategies, the sufficiency of budgeted capital expenditures in carrying out planned activities, the availability and cost of services, the ability to obtain financing on acceptable terms, the actual results of exploration projects being equivalent to or better than estimated results in technical reports or prior exploration results, that counterparties to contracts will be creditworthy and will perform their obligations under such contracts, the Offering and the Transaction and whether they will be completed on the terms and in the time period contemplated, the absence of material changes in the regulatory environment, the absence of material disruptions in operations and future costs and expenses being based on historical costs and expenses, adjusted for inflation, all of which are subject to change based on market conditions and potential timing delays. Although management of the Company consider these assumptions to be reasonable based on information currently available to them, these assumptions may prove to be incorrect.

By their very nature, forward-looking statements involve inherent risks and uncertainties (both general and specific) and risks that forward-looking statements will not be achieved. Undue reliance should not be placed on forward-looking statements, as a number of important factors could cause the actual results to differ materially from the Company's beliefs, plans, objectives and expectations, including, among other things: general economic and market factors, including business competition, changes in government regulations or in tax laws; the early stage development of the Company and its projects; general political and social uncertainties; commodity prices; the actual results of current exploration and development or operational activities; changes in project parameters as plans continue to be refined; accidents and other risks inherent in the mining industry; lack of insurance; delay or failure to receive board or regulatory approvals; changes in legislation, including environmental legislation, affecting the Company; timing and availability of external financing on acceptable terms; conclusions of economic evaluations; the creditworthiness of counterparties to contracts and their performance thereof; the risk that production from the Company's mines will differ from that anticipated; the Offering or the Transaction will not be completed on terms favourable to the Company or at all; the risk of a material disruption in operations and lack of qualified, skilled labour or loss of key individuals. These factors should not be considered exhaustive. Many of these risk factors are beyond the Company's control and each contributes to the possibility that the forward-looking statements will not occur or that actual results, performance or achievements may differ materially from those expressed or implied by such statements. The impact of any one risk, uncertainty or factor on a particular forward-looking statement is not determinable with certainty as these risks, uncertainties and factors are interdependent and management's future course of action depends upon the Company's assessment of all information available at that time.

The forward-looking statements contained herein are expressly qualified in their entirety by this cautionary statement. The forward-looking statements included in this press release are made as of the date of this press release and the Company does not undertake and is not obligated to publicly update such forward-looking statements to reflect new information, subsequent events or otherwise unless so required by applicable securities laws.

Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.

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