Cobalt Coal Ltd.
TSX VENTURE : CCF

Cobalt Coal Ltd.

August 19, 2011 16:46 ET

Cobalt Coal Ltd. Announces the Completion of Restructuring Transaction

CALGARY, ALBERTA--(Marketwire - Aug. 19, 2011) - Cobalt Coal Ltd. ("Cobalt" or the "Company") (TSX VENTURE:CCF), is pleased to announce the completion of its restructuring transaction which includes the acquisition of 96% of the Class A Limited Partnership Units and 92% of the Class C Limited Partnership Units of Westchester Coal Limited Partnership, the entering into agreements for the conversion of certain outstanding debentures of Cobalt into Cobalt common shares, the issuance of Cobalt common shares to the Corporation's secured lender (the "Secured Lender") to repay $282,000 of the outstanding debt and the completion of a non-brokered private placement of Cobalt common shares for gross proceeds of approximately $2,078,500.

Westchester Coal Limited Partnership Purchase

Pursuant to the offer made by Cobalt to purchase the Class A and Class C Limited Partnership Units not already owned by Cobalt, Cobalt has acquired 96% of the Class A Limited Partnership Units and 92% of the Class C Limited Partnership Units of the Westchester Coal Limited Partnership.

As consideration for the acquisition of the Class A and Class C Limited Partnership Units, Cobalt issued 1,657,880 Cobalt common shares to the holders of the Class A and Class C Limited Partnership Units who tendered their units to Cobalt's offer.

Cobalt intends to serve notice to the remaining Class A and Class C unitholders who did not tender to the offer whereby Cobalt will acquire the remaining units pursuant to the provisions of the Limited Partnership Agreement.

Cobalt Debentures

Holders of $425,000 in face value of the outstanding debentures of Cobalt (the "Debentures") have agreed to the conversion proposal made to them by Cobalt, pursuant to which they receive repayment of 50% of the face value of their Debentures through the issuance of Cobalt common shares at a deemed price of $0.12 per share with the balance being payable in cash on or before December 15, 2011 (the "Debenture Conversion").

Pursuant to the Debenture Conversion, Cobalt has issued or will issue an aggregate of 3,541,667 Cobalt common shares to the holders of the Debentures who have agreed to participate in the Debenture Conversion. All securities issued pursuant to the Debenture Conversion are subject to a four month hold period expiring on December 20, 2011.

Senior Indebtedness

A formal agreement has been entered into between Cobalt's chairman, Al Kroontje, and the Secured Lender, pursuant to which Mr. Kroontje has agreed to purchase the outstanding debt and security held by the Secured Lender. Cobalt has issued 2,350,000 common shares to the Secured Lender at a deemed price of $0.12 per share to repay $282,000 of the outstanding debt. All securities issued to the Secured Lender pursuant to the agreement are subject to a four month hold period expiring on December 20, 2011.

The Secured Lender also received a $100,000 deposit from Mr. Kroontje and will receive a cash payment of $400,000 on or before September 7, 2011. A final payment of $500,000 is required on or before November 30, 2011. Through the completion of the non-brokered private placement described below, and prior to issuing the common shares to the Secured Lender, Cobalt fulfilled the Secured Lender's condition that a minimum of $2,000,000 in new equity be raised by Cobalt.

Non - Brokered Private Placement

Cobalt is pleased to announce that it has closed its previously announced non-brokered private placement (the "Offering"). Cobalt issued 17,320,831 common shares of the Corporation at a price of $0.12 per common share for gross proceeds of $2,078,500. All securities issued pursuant to the Offering are subject to a four month hold period expiring on December 20, 2011.

About Cobalt

Cobalt is a publicly traded coal exploration and production company headquartered in Calgary, Alberta, Canada with a regional office in Welch, West Virginia USA. Cobalt was created to capitalize on the growth opportunities that exist in the metallurgical coal mining industry.

The securities of Cobalt being offered have not been, nor will be, registered under the United States Securities Act of 1933, as amended, and may not be offered or sold within the United States or to, or for the account or benefit of, U.S. persons absent U.S. registration or an applicable exemption from U.S. registration requirements. This release does not constitute an offer for sale of securities in the United States.

READER ADVISORY

Statements in this news release may contain forward-looking information including the timing of closing of the Private Placement. The reader is cautioned that assumptions used in the preparation of such information may prove to be incorrect. Events or circumstances may cause actual results to differ materially from those predicted, a result of numerous known and unknown risks, uncertainties, and other factors, many of which are beyond the control of the Company. These risks include, but are not limited to, the risks associated with the coal mining industry, commodity prices and exchange rate changes. Industry related risks could include, but are not limited to, operational risks in exploration, development and production, delays or changes in plans, risks associated to the uncertainty of reserve estimates, health and safety risks and the uncertainty of estimates and projections of production, costs and expenses. The reader is cautioned not to place undue reliance on this forward-looking information.

Neither TSX Venture Exchange nor its Regulation Service 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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