EastCoal Inc.
TSX VENTURE : ECX
AIM : ECX

EastCoal Inc.

June 03, 2013 21:59 ET

EastCoal Announces Private Placement, Corporate Update, Rights Offering and Resumption of Trading

VANCOUVER, BRITISH COLUMBIA--(Marketwired - June 3, 2013) -

THIS NEWS RELEASE IS INTENDED FOR DISTRIBUTION IN CANADA AND ANY OTHER JURISDICTION IN WHICH IT IS LAWFUL TO DISTRIBUTE THIS NEWS RELEASE AND IS NOT AUTHORIZED FOR DISTRIBUTION TO UNITED STATES NEWSWIRE SERVICES OR FOR DISSEMINATION IN THE UNITED STATES.

EastCoal Inc. (TSX VENTURE:ECX)(AIM:ECX) (the "Company" or "EastCoal", with the Company and its subsidiaries, together the "Group") announces a brokered private placement (the "Placing") of 351,900,000 common shares (the "Placing Shares") of the Company, primarily with existing and new institutional investors ("Placees"), at a price of C$0.02 (equivalent to approximately 1.28 pence) per Placing Share (the "Placing Price") and, separate to the Placing, certain directors (the "Participating Directors") have agreed to subscribe (the "Directors' Subscription") for an aggregate of 33,100,000 Common Shares (the "Director Shares") at a price of C$0.02 (equivalent to approximately 1.28 pence) per Director Share (the "Subscription Price") (the Placing and the Directors' Subscription together being the "Fundraising"). The aggregate gross proceeds of the Fundraising will be C$7.7 million (equivalent to approximately £4.93 million).

In connection with the Fundraising, application (the "Application") has been made for the admission of the Placing Shares and the Director Shares to trading on AIM (the "Admission") and it is expected that dealings will commence on June 7, 2013.

Background to and reasons for the Fundraising

The operational updates released by the Company in February 2013 and March 2013 highlighted the temporary suspension and continuous technical challenges of the tip washing operations; the lower-than-forecast production at the Menzhinsky Mine ("Menzhinsky") due to the deterioration at the end of the current long wall (and its subsequent discontinuation); the impact of falling coal prices on the Company's financial position; and the resulting working capital constraints. As a result, the board of directors of the Company (the "Board" or "Directors") believes that the Company's current working capital position is insufficient to sustain operations and has been pursuing various funding initiatives to urgently strengthen the Company's financial position. The Board is confident that the completion of the Fundraising will provide the longer term financial solution required by the Company.

The Board estimates that the Company's current corporate creditors at EastCoal Inc., the Group's parent company (excluding a C$1.5 million convertible debenture), total approximately C$1.56 million. In addition, creditors currently due and payable in East Coal Company LLC ("East Coal Company"), the Company's wholly owned subsidiary that owns the Verticalnaya Mine ("Verticalnaya"), are approximately C$1.38 million. Finally, at Inter-Invest Coal LLC ("Inter-Invest"), the Company's wholly owned subsidiary that owns Menzhinsky mine and the wash plant, the creditors currently due and payable are approximately C$4.9 million. Total creditors at Menzhinsky (excluding inter-company balances) are approximately C$11.6 million. Inter-company balances between Inter-Invest and the Group amount to approximately C$16.4 million owed to the Company. The Company stands as an ordinary creditor of Inter-Invest and would seek to recover this debt in the administration or liquidation of Inter-Invest accordingly, albeit the Company currently values this debt at zero. The Board has established that the Company has no significant cash balance and receivables to be approximately C$98,000. The Company is evidently currently unable to meet its debts as they fall due and payable and in the absence of external funding being raised in the immediate term, has insufficient cash resources to continue the Group's operations.

On May 31, 2013 the Company entered into a loan agreement for C$350,000 with Salida Capital International Corp. ("Salida") to provide required funds to meet certain immediate obligations of the Group at Verticalnaya, further details which are set out in the paragraph "Salida Loan Payment" below.

At the corporate level, the Company has reached agreement with the major creditors of EastCoal with regard to, in aggregate, approximately C$800,000 (the "Staged Payment Creditors"), whereby the Staged Payment Creditors have agreed to receive the full outstanding sums due in staggered periodic payments over the course of the period to March 31, 2014.

At Verticalnaya, significant progress has been made on the development of ventilation and the conveyor roadways. Nevertheless, development work has been halted, pending resolution of the Company's working capital position. The Board strongly believes that the long term value of Verticalnaya, from which commercial production is expected to commence in Q3 2013, remains intact and it is intended that, upon completion of the Fundraising, the Company will immediately refocus on this asset and recommence the work which has been halted. An agreement has been reached with the owner of the neighbouring wash plant to wash the Verticalnaya "run-of-mine coal" for a toll price of US$10 per tonne at such rate as the Company may dictate (subject to a maximum of 1,500 tonnes per day) and to buy the washed coal product at an expected average price of US$94 per tonne during 2013.

By contrast, operations at Menzhinsky and its associated wash plant continue to represent the area where the most significant challenges have been experienced and which have most severely prejudiced the Company's working capital position.

After considering and exhausting all of its options, the Board resolved on May 22, 2013 to place Inter-Invest into sanation (the formal financial rehabilitation procedure under the laws of Ukraine). The sanation or liquidation of Inter-Invest due to bankruptcy will be carried out in accordance with the Law of Ukraine No. 2343 - XII dated 14 May 1992 "On Restoring of Debtor's Solvency or Declaring the Debtor Bankrupt" (the "Insolvency Law"), or such other legislation in force at such time. It should be noted that under the Insolvency Law, other parties which could include EastCoal as the ultimate parent company of Inter-Invest, may be held liable for Inter-Invest's obligations, if it is deemed to be "at fault" for the bankruptcy of Inter-Invest. It should also be noted that as this provision of the Insolvency Law was only introduced in January 2013 it has yet to be tested in the courts of Ukraine. The Company and the Directors believe, having taken appropriate legal advice, that neither the Company nor the Directors have carried out any action or made any omission which would cause them to be deemed to be "at fault" for the bankruptcy of Inter-Invest. However, there can be no certainty that a Ukrainian court would not find EastCoal to be at fault for these purposes.

The Board believes that when the Fundraising is completed, the strengthened capital base will provide the Company with the necessary working capital to execute the proposed strategy focussed on operations at Verticalnaya and increase future shareholder value.

Agreement with Aponet and Inter-Invest

The Company has entered into an agreement with Aponet Enterprises Ltd ("Aponet") dated May, 28 2013 (the "Aponet Agreement") pursuant to which the obligation on the Company to assume and procure the payment of Inter-Invest's US$5,833,334 debt obligation and Inter-Invest's payment obligations under the assignment agreement number 3347 dated 11 April 2012 to "Torgovy Dom Krasnoluchugol", a limited liability company (the "Debt Obligation") has been terminated. The Company is also seeking to enter into an agreement with Inter-Invest (the "Inter-Invest Agreement") pursuant to which the obligation on the Company to provide further loans under the Loan Agreement (as defined below) will be terminated.

The assumption of the Debt Obligation constituted part of the non-cash consideration paid by Company to Aponet for the acquisition of Inter-Invest under the terms of a share purchase agreement dated April, 11 2012 (the "Share Purchase Agreement"). In order to comply with the Debt Obligation, the Company, in accordance with the terms of the Share Purchase Agreement, entered into a loan agreement (the "Loan Agreement") with Inter-Invest, pursuant to which the Company undertook to advance US$583,333.48 (the "Repayment Amount") to Inter-Invest every three months until 30 September 2014. Inter-Invest then used the Repayment Amounts to meet its quarterly repayment obligations to "Torgovy Dom Krasnoluchugol".

Pursuant to the Aponet Agreement the Company's obligations to assume the Debt Obligation have now been terminated and on completion and registration of the Inter-Invest Agreement with the National Bank of Ukraine, the Company's obligation to provide further loans to Inter-Invest will also be terminated, and Inter-Invest will be obligated to repay to the Company the loan monies previously provided to it in accordance with the terms of the Loan Agreement.

Agreement with Surrey Dynamics

The Company entered into a convertible debenture (the "Debenture") with Surrey Dynamics Limited ("Surrey Dynamics") on January 3, 2013 for a principal amount of US$1,517,174 maturing on January 3, 2015. The Debenture was entered into in respect of the balance owing to Surrey Dynamics on maturity of the debenture entered into between the Company and Surrey Dynamics in connection with the acquisition by the Company of East Coal Company in November 2009.

Under the terms of the Debenture, interest is payable in quarterly instalments at an interest rate of 10 per cent. per annum. The Company failed to pay the interest payment due on April 1, 2013, amounting to approximately US$37k, which constituted an event of default under the Debenture, entitling Surrey Dynamics to serve notice requiring the immediate repayment of the principal amount and all accrued but unpaid interest due under the Debenture.

Following discussions, Surrey Dynamics has agreed to grant to EastCoal a limited waiver of the events of default under the Debenture, conditional upon payment in full of the interest payment which fell due on April 1, 2013. For this purpose, on May 31, 2013, the Company and Surrey Dynamics entered into an agreement pursuant to which (1) Surrey Dynamics waived all events of default existing under the Debenture at that date and any further events of default that arise or occur between such date and June 30, 2013 (or such later date as the parties may agree); and (2) the Company will immediately pay the overdue interest which was payable on April 1, 2013.

In addition, it has been agreed that the conversion price under the Debenture will be adjusted from C$0.23 to C$0.02, for a period of 75 days following Admission, to be recorded in a supplemental indenture to the Debenture. The TSX-V has agreed to such amendment to the conversion price. The supplemental indenture will also amend the Debenture by providing that any common shares issued to Surrey Dynamics upon conversion of any part of the principal amount under the Debenture within 75 days of Admission will not be included in the calculation of any entitlement of Surrey Dynamics to participate in the Rights Offering referred to below.

Salida Loan Agreement

The Company has entered into a loan agreement (the "Salida Loan Agreement") with Salida, whereby Salida will provide the Company with a loan facility for an aggregate of up to C$350,000 (the "Loan"). The Loan will bear interest at a rate of 12 per cent. per annum compounded annually and will be payable at the time that the principal becomes due and payable.

The term of the Loan will be from the date of the advance until December 31, 2013 and the principal and accrued interest shall be due and payable on the earlier of: (i) the expiry of the term of the Loan; or (ii) Admission. Furthermore, the Loan may be prepaid, at any time, without premium or penalty.

Pursuant to the terms of the Salida Loan Agreement, the Company has executed a general security agreement granting security interests in present and future undertaking and property of the Company. In addition, a Director (the "Subordinate Lender") that loaned C$200,000 to the Company on November 28, 2012 (the "Subordinate Loan") has agreed to subordinate the security granted to him under his loans to the security granted to the Lender. The proceeds of the Loan will be used for operating expenses at Verticalnaya.

Agreement with the Trade Union

East Coal Company is currently in default of its payment obligations to its employees under the employees' contracts of employment. The Primary Trade Union East Coal Company LLC, the trade union that represents employees of East Coal Company, has indicated that labour will be withdrawn from Verticalnaya unless all outstanding wages are paid without further delay. As at May 31, 2013, the aggregate wage arrears owing by East Coal Company to its employees was US$840,802 (the "Outstanding Amount").

Following discussions with the Primary Trade Union East Coal Company, East Coal Company has agreed to pay the sum of US$205,558 (the "Initial Amount") in part satisfaction of the Outstanding Amount to its employees by no later than June 4, 2013 with the balance of the Outstanding Amount to be satisfied out of the proceeds of the Fundraising. On this basis, the Primary Trade Union East Coal Company LLC has indicated that labour will not be withdrawn from Verticalnaya provided that East Coal Company makes such payments. The Initial Amount shall be funded through the drawdown of the Loan, details of which are set out in the paragraph "Salida Loan Agreement" above.

Agreement with the Electricity Provider

East Coal Company is currently in default of the payment terms of its electricity provider, State Enterprise "Regionalnye elektricheskie seti". State Enterprise "Regionalnye elektricheskie seti" has indicated that the supply of electricity to Verticalnaya will be disrupted unless the outstanding all amounts owed by East Coal Company to State Enterprise "Regionalnye elektricheskie seti" are paid without further delay. As at May 31, 2013, the aggregate amount owing by East Coal Company to State Enterprise "Regionalnye elektricheskie seti" was US$147,153 (the "Outstanding Payment").

Following discussions with State Enterprise "Regionalnye elektricheskie seti", East Coal Company has agreed to pay the Outstanding Payment to State Enterprise "Regionalnye elektricheskie seti", by no later than June 4, 2013. On this basis, State Enterprise "Regionalnye elektricheskie seti" has indicated that the supply of electricity to Verticalnaya will not be disrupted provided that East Coal Company makes such payments. The Outstanding Payment shall be funded through the drawdown of the Loan, details of which are set out in the paragraph "Salida Loan Agreement" above, and the balance from Company funds.

Further Details of the Fundraising

Cenkos Securities plc ("Cenkos") has been appointed as sole broker to the Placing and is acting as agent for the Company in connection with the placing of the Placing Shares on behalf of the Company with prospective placees. The Placing Shares to be issued will be offered outside of the province of British Columbia, Canada by way of private placement to placees located exclusively in the United Kingdom who are "Qualified Investors" falling within Article 19(5) and Article 49(2) of the United Kingdom Financial Services and Markets Act 2000 (Financial Promotion) Order 2005, and, in each case, who are "Eligible Counterparties" within the meaning of COBS 3.6.1 of the Financial Conduct Authority's ("FCA's") Conduct of Business Sourcebook.

In addition, and separate from the Placing, the Participating Directors have agreed to invest C$662,000 and subscribe for 33,100,000 Director Shares at the Subscription Price. Details of each Director's participation in the Directors' Subscription are included in the table below and the Directors' Subscription will complete at the same time as the Placing. Further, Cenkos has undertaken to subscribe for 50,000,000 Placing Shares at the Placing Price, such figure representing an investment approximately equal to the equivalent amount of fees which will be due and payable to Cenkos by the Company in respect of the provision of certain corporate finance and corporate broking advice and assistance.

Following the Fundraising, the Participating Directors' beneficial interests will be as follows:

Participating Director Common Shares held immediately prior to Admission % of total issued share capital immediately prior to Admission Common Shares held after Admission % of total issued share capital held after Admission
John Byrne 4,407,000 1.28% 16,907,000 2.32%
John Conlon 9,561,794 2.79% 30,161,794 4.14%

The Placing Shares and the Director Shares will represent approximately 52.88 per cent. of the existing share capital as enlarged by the Fundraising and will, when issued, rank pari passu in all respects with the other common shares then in issue (including all rights to all dividends and other distributions declared, made or paid following Admission). The closing of the Fundraising will be subject to certain conditions, including, but not limited to, Admission occurring on, or before, June 7, 2013 (or such later date as Cenkos and the Company may agree, not being later than June 21, 2013). Application has been made for the Placing Shares and the Directors Shares to be admitted to trading on AIM, and it is expected that trading in the Placing Shares and the Directors Shares will commence at 8:00 a.m. on June 7 2013.

Use of Proceeds

The Board intends that the net proceeds of the Fundraising will be used by the Company to consolidate the Group's working capital position, fund capital expenditures and repay certain outstanding indebtedness.

Specifically, the Board intends to use the net proceeds of the Fundraising of approximately C$6.35 million,as follows:

  • approximately C$1.76 million on capital expenditure and development costs at Verticalnaya in preparation for the ramp-up to 11,000 tonnes, including the face kit; and a further C$3.1 million to fund operating losses until this operation is cash flow positive; and
  • approximately C$1.49 million in general working capital (including approximately C$360k repayment of corporate creditors and C$350k repayment of the Loan).

Trading in the Company's Common Shares

Following the issue of this announcement, the Board has requested a lifting of the suspension of trading in its common shares on AIM and the TSX-V and trading is expected to resume with immediate effect from 8:00 a.m. British Summer Time on AIM on June 4, 2013 and from 9:30 a.m. Eastern Time on TSX-V on June 5 2013. Shareholders should note, however, that although these are the current expected timings, the precise timing of the resumption of trading on both AIM and the TSX-V is subject to final confirmation by the relevant regulator on each market.

Rights Offering and Consolidation

As a condition to the TSX Venture Exchange's (the "TSX-V") conditional approval of the Fundraising, the Company has given an undertaking to the TSX-V that, conditional on the completion of the Fundraising and subject to all applicable corporate and securities laws and regulatory rules, it will complete an offering to shareholders (the "Rights Offering"), within 75 days of the date of Admission, in recognition that the Placing will be dilutive. However, there is no stand-by guarantee for or underwriting of the Rights Offering, and therefore, there can be no assurance that any proceeds will be raised from the Rights Offering.

The TSX-V has advised the Company that if the Rights Offering is not completed within 75 days of the date of Admission, the TSX-V intend to de-list the Company's shares from the TSX-V. Acknowledging the dilutive impact of the Fundraising, the Company fully intend to and will endeavour to meet the timetable laid down by the TSX-V for the Rights Offering. If for reasons or factors that arise that are beyond the Company's control (including, but not limited to, reasons or factors attributable to applicable corporate and securities laws and regulatory rules) the Company is not able to achieve such timetable, the Company will seek the advice of the TSX-V and may, in such circumstances, have no alternative but to be de-listed from the TSX-V and consider listing on an alternate Canadian exchange subject to the Company meeting such exchange's listing requirements. Where the Company elects to de-list, such a course of action will require the consent of Surrey Dynamics.

As a condition to the TSX-V's conditional approval of the Fundraising, the Company is undertaking to hold a shareholder vote to effect a share consolidation of all of the issued and outstanding common shares of the Company on a five to one basis (the "Consolidation") at the Company's next annual general meeting, which is currently expected to be held in late June or early July 2013. The Consolidation will also be subject to TSX-V approval. The effect of the Consolidation will be to reduce the total number of shares in issue following the Fundraising (no fractional common shares will be issued and any fractional common shares that would otherwise result from the Consolidation will be rounded up or down to the nearest whole common share, with 0.5 of a common share being rounded up). The Board believe that this may reduce the volatility in the price of the Company's common shares and may ensure that the price of the common shares is more appropriate for a company of EastCoal's size than would otherwise have been the case following Admission.

Under the Rights Offering, it is proposed that shareholders will be entitled to subscribe for one common share at the Placing Price for each common share that they hold. In the event that the Consolidation takes place prior to the completion of the Rights Offering, the subscription price per common share and the number of common shares that shareholders shall be entitled to subscribe for shall be adjusted accordingly. It is also proposed that, subject to applicable securities laws, shareholders may apply to subscribe for common shares in excess of their one for one entitlement and may be allocated additional shares in the event that all of the shareholders do not take up their maximum entitlement.

The Placees and the Participating Directors have undertaken to the Company not to take up their entitlements in the Rights Offering to the extent that such entitlements relate to the Placing Shares or Director Shares (as applicable) that they acquired in the Fundraising. This undertaking is required by the TSX-V which the Company understands is intended to ensure that shareholders who have not participated in the Fundraising may seek to broadly restore their pre-Fundraising dilutive position in the Company if they wish to do so. The Placees and the Participating Directors have also undertaken to vote all their shares in favour of the resolution giving effect to the Consolidation to be proposed at the next annual general meeting of the Company.

The Rights Offering will be undertaken in accordance with applicable Canadian securities laws and regulatory requirements. Further details regarding the Rights Offering will be notified to shareholders in due course.

Related Party Transactions

Participating Directors and Salida

On the basis that the Participating Directors, and certain other insiders, including Salida, (together, the "Related Parties") (who are each considered an "insider" of the of the Company for the purposes of the Policies of the TSX-V) may participate in the Fundraising, any such participation in the Fundraising may be considered a "related party transaction" within the meaning of Multilateral Instrument 61-101 - Protection of Minority Security Holders in Special Transactions ("MI 61-101") which is incorporated into Policy 5.9 of the TSX-V. As the Fundraising may be a related party transaction, the following additional disclosures are provided (following the listing of disclosures in Section 5.2 of MI 61-101).

In conducting their review and approval process with respect to the Fundraising, the Board have determined that the distribution of an information circular to shareholders, the preparation and distribution of a formal valuation and the seeking of shareholder approval for, and in connection with, the Fundraising is not necessary under MI 61-101, because:

  1. for the purposes of Section 5.5(a) of MI 61-101 the Board have determined, in good faith, that neither the Placing Shares or Director Shares (as relevant) issued to, nor the aggregate consideration to be paid by, each of the Related Parties in connection with the Fundraising will exceed 25 per cent. of the market capitalization of the Company on the date hereof, and on that basis the Fundraising falls within an exemption from the formal valuation requirement of Section 5.4 of MI 61-101; and
  2. for the purposes of Section 5.7(1)(a) of MI 61-101 the Board have determined, in good faith, that neither the Placing Shares or Director Shares (as relevant) issued to, nor the aggregate consideration to be paid by, each of the Related Parties in connection with the Fundraising will exceed 25 per cent. of the market capitalization of the Company on the date hereof, and on that basis the Fundraising falls within an exemption to the minority shareholder approval requirement of Section 5.6 of MI 61-101.

On the basis that the Fundraising is currently expected to close on June 7, 2013, the Company will not be able to file a material change report 21 days prior to such date as the participation of the Related Parties in the Fundraising has only just been established. The placing of 95,000,000 common shares with Salida is also a related party transaction under the AIM Rules for Companies. The Directors consider, having consulted with the Company's nominated adviser, Cenkos, that the terms of the transaction are fair and reasonable insofar as shareholders are concerned.

Salida Loan Agreement

On the basis that Salida is an "insider" of the Company, the Loan may amount to a "related party transaction" within the meaning of Multilateral Instrument 61-101 ("MI 61-101") which is incorporated into TSX-V Policy 5.9. As a related party transaction, the following additional disclosures are provided (following the listing of disclosures in Section 5.2 of MI 61-101).

In conducting their review and approval process with respect to the Loan, the Board has determined that the distribution of an information circular to shareholders, the preparation and distribution of a formal valuation and the seeking of shareholder approval for, and in connection with, the Loan is not necessary under MI 61-101.

For the purposes of Section 5.5(a) and Section 5.7(1)(a) of MI 61-101, the Board has determined, in good faith, that the fair market value of the Loan, when drawn down in full, will not exceed 25 per cent. of the market capitalisation of the Company, and on that basis the Loan falls within exemptions from the formal valuation requirement and the minority shareholder approval requirement (of Sections 5.4 and 5.6 of MI 61-101, respectively).

There will be less than 21 days between the date of filing of the Company's material change report in respect of the Loan and the advancement of the Loan pursuant to the terms of the Loan Agreement. The Company considers this is reasonable and necessary in order to address the Company's immediate funding requirements and corporate operations.

The Salida Loan Agreement, together with the other documents related thereto referred to above is a related party transaction for the purposes of the AIM Rules for Companies as Salida is a "related party" for the purposes of such rules The Directors consider, having consulted with the Company's nominated adviser, Cenkos, that the terms of the transaction are fair and reasonable insofar as shareholders are concerned.

Notice of Civil Claim

The Company's former Chief Financial Officer, Mr. George Lawton, has today filed a Notice of Civil Claim to instigate formal legal proceedings. The Notice of Civil Claim has been filed with respect to an alleged breach of Mr. Lawton's employment contract by the Company in connection with Mr. Lawton's departure from the Company and he is seeking a payment of C$257,596.38 for 12 months' severance which Mr. Lawton alleges he is owed under his employment contract by the Company. The Company has taken legal advice on the matter and intends to vigorously defend the claim. Further updates on the matter will be provided in due course.

Shares in Issue

Following Admission, the Company will have 728,048,493 common shares in issue and each share has the right to one vote. Therefore, for the purposes of the FCA's Disclosure and Transparency Rules, the total number of voting rights in the Company is 728,048,493. The above figure may be used by shareholders as the denominator for the calculations by which they will determine whether they are required to notify the Company of their interests in, or change to their interests in, EastCoal Inc. under the FCA's Disclosure and Transparency Rules.

General

The Placing Shares and the Director Shares have not been qualified for sale in the province of British Columbia, Canada and may not be offered or sold in the province of British Columbia, Canada, directly or indirectly, on behalf of the Company.

The Placing Shares and the Director Shares, to be issued in connection with the Fundraising, will be subject to the resale restrictions contained in the TSX-V Corporate Finance Manual. Such Placing Shares and Director Shares may not, without the prior written approval of the TSX-V (and in compliance with all applicable securities legislation), be sold, transferred, hypothecated or otherwise traded on or through the facilities of the TSX-V or otherwise in Canada or to or for the benefit fo a Canadian resident until a date that is four months and one day from Admission.

The Placing Shares and the Director Shares have not been and will not be registered under the U.S. Securities Act of 1933, as amended, or any state securities laws, and may not be offered or sold in the United States absent registration or an applicable exemption from such registration requirements.

This press release shall not constitute an offer to sell or the solicitation of an offer to buy the Placing Shares and the Director Shares in the province of British Columbia, Canada, the United States or in any jurisdiction in which such offer, sale or solicitation would be unlawful.

For the purposes of establishing the pound sterling exchange rate, the Company has used the Bank of Canada exchange rate for Canadian dollars and pounds sterling published on www.bankofcanada.ca at 12 noon on May 24, 2013 which was C$1.5613 : £1.00.

This press release contains projections and forward-looking information that involve various risks and uncertainties regarding future events. Such forward-looking information can include without limitation statements based on current expectations involving a number of risks and uncertainties and are not guarantees of future performance. There are numerous risks and uncertainties that could cause actual results to differ materially from those expressed in the forward-looking information. These and all subsequent written and oral forward-looking information are based on estimates and opinions on the dates they are made and are expressly qualified in their entirety by this notice. Except as required by law, EastCoal assumes no obligation to update forward-looking information should circumstances or management's estimates or opinions change.

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

Contact Information

  • EastCoal Inc.
    Abraham Jonker
    President and Acting CFO
    +1 (604) 681 8069 / +1 (604) 992 5600 (Cell)
    www.eastcoal.ca

    Cenkos Securities plc
    Ken Fleming
    +44 (0) 207 397 8900

    Cenkos Securities plc
    Derrick Lee
    +44 (0) 131 220 6939

    Cenkos Securities plc
    Alan Stewart
    +44 (0) 131 220 6939

    Tavistock Communications
    Jos Simson
    +44 (0) 207 920 3150

    Tavistock Communications
    Emily Fenton
    +44 (0) 207 920 3150

    Tavistock Communications
    Mike Bartlett
    +44 (0) 207 920 3150