Cline Mining Corporation

Cline Mining Corporation

May 08, 2008 20:46 ET

Cline Announces Acquisition of New Elk Surface Assets and Completion of NI 43-101 Technical Report on New Elk Coal Properties

SUDBURY, ONTARIO--(Marketwire - May 8, 2008) - Cline Mining Corporation ("Cline" or the "Company") (TSX:CMK) announces that it has acquired the existing coal property surface assets (the "New Elk Surface Assets"), including the coal preparation plant, silos, buildings, railway right of way, surface real estate, mining equipment, conveyor systems, electrics and coal waste dump all related to the New Elk Coal Company LLC ("New Elk") coal properties (the "New Elk Coal Properties") located near the town of Trinidad in Los Animas County, Colorado, U.S.A. The New Elk Surface Assets were acquired from a group of companies unrelated to New Elk. In addition, as a result of the acquisition, the royalty (U.S.$2.50 per ton of coal sold or 10% of gross sales whichever is greater) payable to the vendors of the New Elk Surface Assets was terminated. The consideration paid by the Company for the New Elk Surface Assets was U.S.$1.6 million plus the assumption of an existing reclamation bond to the government of Colorado in the amount of U.S.$967,000. The New Elk Surface Assets, which includes the coal preparation plant, presently has a designed capacity of 550 tons per hour.

The purchase of the New Elk Surface Assets by Cline is the first stage in its acquisition of all of the coal properties and coal resources of New Elk, with which it intends to proceed. The New Elk Surface Assets are key to the development of the New Elk coal resources, and fundamental to Cline's plan to bring the New Elk coal resources into commercial production as soon as possible. Cline acquired the New Elk Surface Assets pursuant to an agreement dated November 26, 2007 with New Elk, which agreement also provides Cline with the right to acquire all of the existing New Elk Coal Properties including the existing New Elk coal mine properties, coal resources and related assets.

The New Elk Coal Properties include New Elk's substantial metallurgical and thermal coal resources of 315,000,000 total tons of National Instrument 43-101 ("NI 43-101") compliant in-place coal, detailed below, located within 18,355 contiguous acres. Additional assets to be acquired include a comprehensive earlier data base prepared by CF&I Steel Company (see History of New Elk Mine below) and a current coal mining permit. The purchase price for the New Elk Coal Properties is U.S.$13.8 million, the assumption of the existing U.S.$2.8 million reclamation bond and a U.S.$1.00 per ton royalty on coal sales with a Cline buy-out right of $15 million. The acquisition of the New Elk Coal Properties, data base and mine permit together with the New Elk Surface Assets will enable Cline to bring the mine to production with minimal startup time. The Company is currently arranging the financing to complete this second stage of the acquisition.

Behre Dolbear & Company Ltd. ("Behre Dolbear") was commissioned by and has delivered to Cline a NI 43-101 compliant Technical Report on the New Elk coal resources. The independent Qualified Person responsible for authoring the Technical Report and summarizing the technical material presented in this release is Mr. Gardar G. Dahl, Jr., C.P.G., a senior associate of Behre Dolbear. Mr. Dahl is an established coal consultant with more than 40 years experience in coal exploration, mining and sales, both in surface and underground operations.

Behre Dolbear is one of the oldest, continually operating minerals industry consulting firms in the world, offering fully integrated management consulting and technical advisory services specializing exclusively in the minerals industries from offices around the world. Behre Dolbear has performed numerous coal assignments globally for major and junior mining companies alike.

A summary of the coal resources, measured in millions of tons, included in the Technical Report prepared by Behre Dolbear are summarized below:

Description Measured Indicated Total Inferred
New Elk Mine 19.2 38.7 57.9 6.7
Colorado DOW Lease 52.7 159.2 211.9 27.2
NEC Properties 5.8 15.3 21.1 0.8
XTO Lease 9.9 14.2 24.1 0.3
Total 87.6 227.4 315.0 35.0

Note: Density Factor equals 85#/Ft3

The complete Technical Report will be posted on the Cline website located at and filed on SEDAR in the normal course.

History of New Elk Mine

The New Elk Mine was opened in 1951 by the CF&I Steel Company to provide metallurgical coking coal for its blast furnace iron and steel production plant at Pueblo, Colorado. The CF&I plant was converted to direct electrolytic reduction of steel in 1981 eliminating its need for coking coal and the mine was sold to Wyoming Fuels who continued operation of the mine through 1989. The coal preparation plant, which was built in 1984 to improve product coal specification, continued operating until 1996.

About Cline

Cline Mining Corporation is a mine development company focused on the exploration and development of gold in Canada, uranium and iron-ore in Madagascar and metallurgical coal in Canada for the international seaborne coal trade market.

This news release has been prepared by Cline's management and the technical information has been reviewed and approved by Mr. Gardar G. Dahl, Jr., CPG, a Qualified Person for the purposes of NI 43-101.


Ken Bates, President and Chief Executive Officer

Forward Looking Information

All statements, other than statements of historical fact, contained in this news release, including any information as to the Company's current expectations with respect to the potential acquisition and future development of the New Elk Coal Properties, constitute "forward-looking information" within the meaning of applicable securities laws. Words such as "intend", "may", "will", "plan", "potential" or similar words suggesting future outcomes identifies forward-looking information, which is, by its very nature, not a guarantee of Cline's future operational or financial performance, and are subject to risks and uncertainties, both known and unknown, as well as other factors that could cause the Company's actual results to differ materially from those expressed or implied in any forward-looking information made by, or on behalf of, the Company. Readers are cautioned not to place undue reliance on forward-looking information. By its nature, forward-looking information involves numerous assumptions, known and unknown risks and uncertainties, of both a general and specific nature, that could cause actual results to differ materially from those suggested by the forward-looking information or contribute to the possibility that predictions, forecasts or projections will prove to be inaccurate. These factors include, but are not limited to: uncertainty related to the Company's title to its properties; liabilities inherent in coal mine development and production; geological, mining and processing technical problems; the Company's inability to obtain required mine licenses, mine permits and regulatory approvals required in connection with mining and coal processing operations; dependence on third party coal transportation systems; competition for, among other things, capital, acquisitions of reserves, undeveloped lands and skilled personnel; changes in commodity prices and exchange rates; changes in steel-making methods and other technological changes; the oversupply of, or lack of demand for, metallurgical coal; currency and interest rate fluctuations; various events which could disrupt operations and/or the transportation of coal products, including labour stoppages and severe weather conditions; the demand for and availability of rail, port and other transportation services; the other factors discussed under "Risk Factors" in Cline's 2007 Annual Information Form; and management's ability to anticipate and manage the foregoing factors and risks. Information relating to the magnitude or quality of mineral deposits is deemed to be forward-looking information.

The reliability of such information is affected by, among other things: uncertainty of estimates of their size or composition; uncertainty of projections relating to costs or production, transportation or estimates of market prices for products; the possibility of delays in mining activities; changes in plans with respect to exploration, development projects or capital expenditures; and various other risks including those relating to health, safety and environmental matters. The Company cautions that the list of factors set forth above is not exhaustive. Some of the risks, uncertainties and other factors which negatively affect the reliability of forward-looking information are discussed in the Company's public filings with the Canadian securities regulatory authorities, including its most recent management information circular, annual report, quarterly reports, material change reports and news releases. Copies of the Company's Canadian public filings are available at The Company further cautions that information contained on, or accessible through, this website is current only as of the date of such information and may be superseded by subsequent events or filings. Except as required by applicable securities laws, the Company undertakes no obligation to update publicly or otherwise revise any information, including any forward-looking information, whether as a result of new information, future events or other such factors that affect this information.

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