CanAm Coal Corp.

CanAm Coal Corp.

September 30, 2010 14:47 ET

CanAm Coal Marks Turnaround and Reports First Ever Quarterly Profit

CALGARY, ALBERTA--(Marketwire - Sept. 30, 2010) - CanAm Coal Corp. (TSX VENTURE:COE) ("CanAm" or the "Company") has filed its unaudited interim consolidated financial statements and related management's discussion and analysis for the three and six month period ended July 31, 2010. Copies of these documents may be obtained via the SEDAR website.

CanAm is pleased to report that it continued to build on its momentum into the second quarter of fiscal 2011 and the Company has recorded revenue and income from mining operations of 1,434,064 (Q1 - $1,124,738) and $216,408 (Q1 - $177,984), an increase over the first quarter of 27% and 22%, respectively. As previously reported, production at its 49% owned coal company, RAC Mining LLC, continued to increase throughout the quarter and record production of 9,874 tons was achieved in the month of June. For the first half of fiscal 2011, revenue and income from mining operations were $2,558,801 and $394,392, respectively. In the first half of fiscal 2010, the Company did not have any active mining operations.

With increasing production since start up of operations, the Company marked a turnaround and reported its first ever quarterly profit. The net profit for the three month period ended July 31, 2010 was $23,296 as compared to a net loss of $39,784 in the first quarter and a net loss of $175,757 in the second quarter of fiscal 2010. For the first half of fiscal 2011, the Company reported a small net loss of $16,488 which represents a significant turnaround from the year earlier net loss of $351,275.

Key highlights and events for the second quarter include:

  • Total production for the quarter at RAC Mining LLC was 25,131 tons as compared to 20,306 tons in the first quarter and 9,716 tons in fourth quarter of fiscal 2010. Production throughout the second quarter continued to steadily increase and, since start-up, quarter over quarter average monthly production has now increased 39% and 24%, respectively. Record production of 9,874 tons was achieved in the month of June 2010.
  • Production consisted of 81% metallurgical coal (Q1 – 84%) and 19% thermal or steam coal (Q1 – 16%);
  • Generated revenue, income from mining operations and net profit of $1,434,064 (Q1 - $1,124,738), $216,408 (Q1 - $177,984) and $23,296 (Q1 – ($39,784)), respectively;
  • Signed a binding letter of intent to acquire from Job Land & Mineral Inc its 49% ownership in RAC Mining LLC and certain other assets associated with the Powhatan mine site which, if successful, would result in the Company owning 98% of RAC Mining LLC.
  • Raised additional funds as a result of the exercise of warrants for proceeds of $129,250;
  • Executed on our process to complement the Company's management and board of directors by appointing Jonathan Legg as Chairman of the Board and Linden Swensen as President of the Company. The Company also engaged Robert and Thomas Lewis of Birmingham Coal & Coke, a medium sized coal marketing and production company, to provide additional coal expertise and experience.

From a financial perspective, the Company marked a turnaround and recorded its first quarterly profit ever. Results for the three and six month period ended July 31, 2010 were as follows:

    Three Month Period     Six Month Period  
    Ended July 31,     Ended July 31,  
    2010   2009     2010     2009  
Revenue $ 1,434,064 $ -   $ 2,558,801   $ -  
Income from mining operations $ 216,408 $ -   $ 394,392   $ -  
Profit (loss) before tax $ 46,265 $ (175,757 ) $ 24,532   $ (351,275 )
Net profit (loss) $ 23,296 $ (175,757 ) $ (16,488 ) $ (351,275 )

The Company's overall financial position as at July 31, 2010 improved significantly:

    2010   2009  
Working capital $ 154,564 $ (255,435 )
Cash from operations, before working capital changes $ 139,405 $ (301,579 )
Capital expenditures $ 757,941 $ 37,832  

Cash from operations, before working capital changes, continued its positive uptrend and amounted to $139,405 as compared to $20,097 in the first quarter of fiscal 2011 and $(301,579) at July 31, 2009. Working capital at July 31, 2010 was $154,564 as compared to $93,565 at January 31, 2010 and $(255,435) at July 31, 2009. The Company continued its capital investment program and finalized the purchase of 3 pieces of Komatsu heavy mining equipment.

Liquidity and cash resources continued to increase subsequent to the quarter end as a result of a successful $2.5 million unsecured convertible redeemable debenture financing and the exercise of 27 million warrants for total proceeds of $1,851,755.


CanAm and its 49% owned company RAC Mining LLC expects to continue to increase monthly production during fiscal 2011, ending January 31, 2011, and anticipates production to attain 12,000 tons per month from the Powhatan surface mine. RAC will also start preparation of the Powhatan mine site for auger or highwall mining. In addition, the Company will continue to evaluate other mining opportunities in the Appalachia region of the United States of America and in particular in the state of Alabama. With the strong coal market and the increasing pricing environment, management intends to expand on its current portfolio of coal assets through strategic acquisitions and/or alliances with local coal producers.

About CanAm Coal Corp.

CanAm is a coal marketing 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 49% 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 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.

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 concerning 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 29, 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 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.

Contact Information

  • CanAm Coal Corp.
    Corporate Head Office:
    Linden Swensen
    403.262.3797 or Toll Free: 1.877.262.5888