CanAm Coal Corp.
TSX VENTURE : COE

CanAm Coal Corp.

November 19, 2010 08:30 ET

CanAm Coal Becomes 98% Owner of RAC Mining LLC

CALGARY, ALBERTA--(Marketwire - Nov. 19, 2010) - Further to a press release dated July 6, 2010, CanAm Coal Corp. (TSX VENTURE:COE) ("CanAm" or the "Company") is pleased to announce that it has completed its transaction to acquire an additional 49% ownership stake in RAC Mining LLC ("RAC") and certain other assets (the "Transaction") from Job Land & Mineral Inc. ("JLM"), its previous partner in RAC.

As a result of the Transaction, CanAm, through its wholly owned subsidiary Radar USA Hold Corp. and its majority owned subsidiary RAC Mining LLC, has acquired from JLM: its 49% ownership share in RAC, its ASMC (permit # 3868 and #3933) and ADEM (# AL077194) permits associated with the Powhatan mine and its leases associated with the Powhatan lands (the "Acquired Assets"). In consideration for the Acquired Assets, CanAm paid a purchase price of US$1,486,250 comprised of: a cash payment of US$251,931 to JLM and assumption by CanAm of a maximum of US$1,234,319 of JLM's indebtedness of which $900,000 is due to RAC Mining LLC. In addition, CanAm will also replace reclamation bonds, in the amount of approximately US$400,000, posted by JLM for coal mined on certain Powhatan lands. As JLM will have substantially completed the reclamation work on such lands, bond money will be released to CanAm in accordance with applicable mining regulations in the state of Alabama. 

RAC and JLM have initiated the process of transferring the ASMC and ADEM permits to RAC but this process has yet to be completed as a third party has made certain claims to the rights to the ADEM permit #AL077194 and ASMC permit #3868. The Company has consulted with outside legal counsel on this matter and, based on their opinion, management has concluded that there is little risk to the transfer of the permits to RAC. Management therefore decided to proceed with the closing of the Transaction. While the permit transfer process is being completed, RAC Mining has received approval from the Alabama Surface Mining Commission ("ASMC"), to mine the Powhatan property as the subcontract miner on both ASMC permits which will continue to be carried under JLM until this matter is settled.

Concurrent with the Transaction, RAC also acquired mining equipment from JLM for a total purchase price of US$904,600 and purchased US$72,000 of equipment from a third party vendor.

"This transaction effectively doubles our interest in RAC Mining from 49% to 98% and, as such, we will see our share of production double overnight. Current production at the mine is approximately 8,000 tons per month and our ultimate goal is to achieve 10,000 to 15,000 tons of production per month. In addition, we anticipate the introduction of highwall mining or auger mining will add between 5,000 to 10,000 tons per month to our production. This acquisition will immediately contribute to earnings starting in Q4 of our fiscal year ending January 31, 2011." said Timothy Bergen, CEO of CanAm. 

HIGHLIGHTS OF THE TRANSACTION AND OPERATIONS

-   Double ownership from 49% to 98% of RAC Mining LLC
-   Target production of 10,000 to 15,000 tons from the Powhatan surface mine operation
-   Target production of 5,000 to 10,000 tons from the Powhatan highwall mine or auger operation
-   Minable portfolio of 370 acres of permitted and 80 acres of non-permitted lands at the Powhatan mine
-   Mineral leases on 640 acres of lands at the Davis Mine
-   High quality Bleu Creek (metallurgical) coal and Mary Lee (thermal) coal
-   80% of production is metallurgical coal which is sold at prices between $109 and $120 per ton
-   Income from mining operations through Q2 of fiscal 2011 was on average $15 per ton of coal sold

RAC took control of mining operations on November 8, 2010 and expects transition of operations to be completed in the next couple of weeks. Key transition activities include the hiring of employees, maintenance and upgrading of existing equipment, acquisition of additional equipment, re-evaluating mining plans, negotiation of 2011 sales contracts and developing a longer term strategy for optimization of the Powhatan property. We anticipate that these transition activities will have a temporary impact on production levels for the fourth quarter.

The Company is also pleased to announce that it has hired Mr. Paul Widinski to become the mine manager and be responsible for the day to day operations at the Powhatan site. Mr. Widinski has over 35 years of engineering, operational and business/project development experience within the coal industry. Paul has worked for major companies such as Peter Kiewit Mining Group, Rocky Mountain Energy and Utah International where he was involved with production and operational management, including manager of several surface mines, and regulatory, operational and financial evaluations of mining projects. "Paul is a great addition to our Company as he will bring the necessary operational and financial management skills that are required to successfully operate the Powhatan property" said Linden Swensen, President of CanAm.

We are also pleased to announce that Mr. Charles Clay will continue in his position as Vice President of RAC Mining LLC and he will work alongside Paul in the development of the Powhatan mine. Mr. Clay has more than 30 years in the coal industry in Alabama and has been involved with the Powhatan mine for over 5 years.

Since inception of RAC on November 23, 2009, significant progress has been made and sales through the first half of fiscal 2011 were as follows:

Quarter   Average tons per Month   Production Increase     % Met Coal  
Q4/2010 ending 01/2010   4,858         81 %
Q1/2011 ending 04/2010   6,769   39 %   84 %
Q2/2011 ending 07/2010   8,377   24 %   81 %

OTHER INFORMATION

The Transaction is subject to acceptance by the TSX Venture Exchange. William Collins, P. Geo., a qualified person, has reviewed and verified the technical mining information contained in this news release.

About CanAm Coal Corp.

CanAm is a coal producing 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 98% owned Alabama coal mine operations, the exclusive rights to a proprietary Coal to Liquids technology which converts coal into liquid fuels (such as oil, jet fuel) at an economical cost with zero airborne emissions and the Buick Coal Project which holds significant coal resources, 188 million tons of indicated and 103 million tons of inferred coal 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.

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", "can", "anticipate", "estimate", "expect", "believe", "will", "may", "project", "budget", "plan", "sustain", "continues", "strategy", "forecast", "potential", "projects", "grow", "take advantage", "well positioned" or similar words suggesting future outcomes. In particular, this press release contains forward-looking statements relating to: the future production of the Powhatan mine; the permitting of the Davis mine; and the potential production at the Davis mine. 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 including, but not limited to, anticipated financial performance, 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, 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; 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.

Forward-looking statements in respect of the future production of the Powhatan mine may be considered a financial outlook. These forward-looking statements were approved by management of the Company on September 20, 2010. The purpose of this information is to provide an operational update on the company's activities and strategies and this information may not be appropriate for other purposes.

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 to update such forward-looking statements to reflect new information, subsequent events or otherwise, except as 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.

Contact Information