Forbes & Manhattan Coal Corp.
TSX : FMC

Forbes & Manhattan Coal Corp.

January 27, 2011 15:47 ET

Forbes & Manhattan Coal Corp. Announces C$36 Million Bought Deal Financing

TORONTO, ONTARIO--(Marketwire - Jan. 27, 2011) -

THIS NEWS RELEASE IS INTENDED FOR DISTRIBUTION IN CANADA ONLY AND IS NOT INTENDED FOR DISTRIBUTION TO UNITED STATES NEWSWIRE SERVICES OR DISSEMINATION IN THE UNITED STATES.

Forbes & Manhattan Coal Corp. (TSX:FMC) ("Forbes Coal" or the "Company") announced today that it has entered into an agreement with a syndicate of underwriters co-led by GMP Securities L.P. and Canaccord Genuity Corp. and including Fraser Mackenzie Limited (collectively, the "Underwriters"), pursuant to which the Underwriters have agreed to purchase, on a bought deal basis pursuant to the filing of a short form prospectus, 8,000,000 common shares (the "Common Shares") of the Company, at a price of C$4.55 per Common Share (the "Offering Price") for aggregate gross proceeds to Forbes Coal of C$36,400,000 (the "Offering"). 

The Company has agreed to grant the Underwriters an over-allotment option to purchase up to an additional 1,200,000 Common Shares at the Offering Price, exercisable in whole or in part, at any time on or prior to the date that is 30 days following the closing of the Offering. If this option is exercised in full, an additional C$5,460,000 will be raised pursuant to the Offering and the aggregate gross proceeds of the Offering will be C$41,860,000.

The Common Shares will be offered by way of a short form prospectus to be filed in all of the provinces of Canada, except Quebec. The Company intends to use the net proceeds from the offering for the repayment of its currently outstanding vendor note from the acquisition of the Company's assets, for expansion capital expenditures at the Company's Magdalena and Aviemore coal mines in South Africa and for general corporate purposes. The Offering is expected to close on or about February 17, 2011 and is subject to certain conditions including, but not limited to, the receipt of all necessary regulatory and stock exchange approvals, including the approval of the Toronto Stock Exchange and the applicable securities regulatory authorities.

The securities being offered have not been, nor will they be, registered under the United States Securities Act of 1933, as amended, and may not be offered or sold in the United States or to, or for the account or benefit of, U.S. persons absent registration or an applicable exemption from the registration requirements. This press release shall not constitute an offer to sell or the solicitation of an offer to buy nor shall there be any sale of the securities in any State in which such offer, solicitation or sale would be unlawful.

About Forbes & Manhattan Coal Corp.

The Company holds a 53.5% 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 Magdelena bituminous mine (the "Magdelena Property") and the Aviemore anthracite mine (the "Aviemore Property") and have a substantial resource base of bituminous and anthracite coal. The Slater Coal Properties are located in the Klipriver coalfield, near Dundee, in the KwaZulu Natal Province of South Africa and can be accessed via the N3, N11 Ladysmith and R102 Dundee tarred national highways that run between Johannesburg and Durban, South Africa. The other 46.5% of Slater Coal is beneficially owned by members of the Slater family.

Cautionary Note

Cautionary Note Regarding Forward-Looking Information: 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 anticipated production results with respect to the Slater Properties, future financial or operating performance of the Company and its projects, statements regarding the prospects for the business of the Company, requirements for additional capital, government regulation of the mineral exploration industry, environmental risks, acquisition of mining licences, title disputes or claims, limitations of insurance coverage and the timing and possible outcome of pending litigation, regulatory matters, proposed use of proceeds and the business objectives that are to be achieved with such proceeds. 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 Company 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 Company 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 Company does not undertake to update any forward-looking information, except in accordance with applicable securities laws.

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