Forbes & Manhattan Coal Corp.
TSX : FMC

Forbes & Manhattan Coal Corp.

April 06, 2011 07:00 ET

Forbes & Manhattan Coal Announces Significant Offtake Agreement

Steady Cash Flow Will Fund Production Ramp Up

TORONTO, ONTARIO--(Marketwire - April 6, 2011) - Forbes & Manhattan (Coal) Corp. (TSX:FMC) ("Forbes Coal" or the "Company") has signed a three year offtake agreement for 1.75 million tonnes (total) with Vitol S.A. ("Vitol"), a leading energy trading company. Vitol will be purchasing thermal coal from the Slater Coal properties at market prices.

Cash flow from this offtake agreement will fund the continued ramping up of production at its two operating mines – Magdalena and Aviemore. The agreement is initially for three years and will support the previously announced production expansion plans.

Forbes Coal intends to transport the coal to the Navitrade Coal Terminal in Richards Bay using its increased rail transport and capacity with Transnet Freight Rail and Grindrod Terminals. Grindrod Terminals provides certain logistical, handling and stockpiling services to shippers in connection with the shipment of bulk cargoes. As per the press release of December 7, 2010, Grindrod Terminals shall provide Forbes Coal with export coal capacity in the Terminal of 600,000 metric tonnes in 2011, 720,000 metric tonnes in 2012 and 960,000 metric tonnes in 2013.

"This milestone for Forbes Coal will support our planned expansion into the coal export market. We have seen a steady increase in export prices over the past 12 months, driven by an increase in demand from India. Together with our increased export capacity at Richard's Bay, the Company is on track to establish itself as a mid-tier Southern African coal company." said Stephan Theron, President and Chief Executive Officer of Forbes Coal.

About Forbes & Manhattan Coal Corp.

Forbes Coal is an emerging mid-tier southern African coal company. It holds a majority interest in two operating mines. The Company holds a 76.75% interest in Slater Coal (Pty) Ltd., a South African company ("Slater Coal") which has a 70% interest in Zinoju Coal (Pty) Ltd. ("Zinoju"). Zinoju holds a 100% interest in certain coal mines in South Africa (the "Slater Coal Properties"). The Slater Coal Properties comprise the operating Magdalena bituminous mine (the "Magdalena Property") and the Aviemore anthracite mine. The mines have a substantial combined resource of coal and each mine has a projected 18 year life span. Forbes Coal is in the process of increasing production at both mines and looks to triple production from current levels in the next two to four years using existing infrastructure and capacity. The Company has in- place transportation infrastructure allowing its coal to reach both export corridors and the growing domestic coal market. Forbes Coal has a strong balance sheet and an experienced coal-focused management team.

About Vitol S.A.

The Vitol Group was founded in 1966 in Rotterdam, the Netherlands. Since then the company has grown significantly to become a major participant in world energy markets and is now one of the world's largest independent energy traders. Its trading portfolio includes crude oil, oil products, LNG, natural gas, coal, power, metals and carbon emissions.

Vitol recently established a coal presence in 2006. In the last five years it has rapidly grown to become one of the world's top 5 marketers of coal. In 2010, Vitol marketed over 20 million tonnes of physical coal via long-term offtake contracts in Australia, Colombia, South Africa and the US and pre-financing arrangements in place in Indonesia, Russia and South Africa. Specifically in South Africa, Vitol has offices in both Johannesburg and Cape Town and currently ships product out of Richard's Bay Coal Terminal and Maputo under long-term offtake agreements to utility and industrial customers in both the Atlantic and Pacific markets. Vitol works closely with junior mining companies in South Africa by assisting with pre-financing and in providing logistics solutions. Further details on Vitol are available on www.vitol.com

Cautionary Notes

Johan Odendaal, B.Sc.(Geol.), B.Sc.(Hons)(Min. Econ.), M.Sc. (Min. Eng.), a director of Minxcon and an independent Qualified Person, as defined in National Instrument 43-101 has reviewed and approved the scientific and technical information contained in this release.

The ability of the Company to triple production amounts has not been the subject of a feasibility study and there is no certainty that the proposed expansion will be economically feasible.

This press release contains "forward-looking information" within the meaning of applicable Canadian securities legislation. Forward-looking information includes, but is not limited to, statements with respect to the future financial or operating performance of the Corporation and its projects, statements regarding the impact of the off take agreement and the prospects for the business of the Corporation, environmental risks, acquisition of mining licences, title disputes or claims, limitations of insurance coverage and the timing and possible outcome of pending litigation and regulatory matters. Generally, forward-looking information can be identified by the use of forward-looking terminology such as "plans", "expects" or "does not expect", "is expected", "budget", "scheduled", "estimates", "forecasts", "intends", "anticipates" or "does not anticipate", or "believes", or variations of such words and phrases or state that certain actions, events or results "may", "could", "would", "might" or "will be taken", "occur" or "be achieved". Forward-looking information is subject to known and unknown risks, uncertainties and other factors that may cause the actual results, level of activity, performance or achievements of the Corporation to be materially different from those expressed or implied by such forward-looking information, including but not limited to: general business, economic, competitive, foreign operations, political and social uncertainties; a history of operating losses; delay or failure to receive board or regulatory approvals; timing and availability of external financing on acceptable terms; not realizing on the potential benefits of the proposed transaction; conclusions of economic evaluations; changes in project parameters as plans continue to be refined; future prices of mineral products; failure of plant, equipment or processes to operate as anticipated; accidents, labour disputes and other risks of the mining industry; and, delays in obtaining governmental approvals or required financing or in the completion of activities. Although the Corporation has attempted to identify important factors that could cause actual results to differ materially from those contained in forward-looking information, there may be other factors that cause results not to be as anticipated, estimated or intended. There can be no assurance that such information will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on forward-looking information. The Corporation does not undertake to update any forward-looking information, except in accordance with applicable securities laws.

Contact Information

  • Forbes & Manhattan Coal Corp.
    Stephan Theron
    President and Chief Executive Officer
    416-861-5912
    stheron@forbescoal.com
    or
    Forbes & Manhattan Coal Corp.
    Sabina Srubiski
    Investor Relations Manager
    416-309-2957
    ssrubiski@forbescoal.com