Grande Cache Coal Corporation

Grande Cache Coal Corporation

May 20, 2009 18:00 ET

Grande Cache Coal Corporation Provides Operational Update

CALGARY, ALBERTA--(Marketwire - May 20, 2009) - Grande Cache Coal Corporation (TSX:GCE) ("Grande Cache Coal" or the "Corporation") today provided the following operational update.

Global steel production continues to be weak and has resulted in lower demand and pricing for metallurgical coal. The World Steel Association is currently forecasting an estimated 15% reduction in worldwide apparent steel usage in 2009. Grande Cache Coal has adjusted it's business plan to reflect this reality and is aggressively pursuing new markets and spot sales, while continuing to position the Corporation for opportunities in the future.

- Grande Cache Coal sold 1.06 million tonnes of metallurgical coal in the fiscal year ended March 31, 2009, including 0.11 million tonnes in the fourth quarter.

- The Corporation anticipates sales volumes of 1.1 to 1.3 million tonnes in fiscal 2010. To date, the Corporation has contracted a significant amount of the anticipated tonnage for fiscal 2010, which includes a portion of carryover from fiscal 2009 at last year's contracted price. Current year price settlements are in keeping with other announced settlements in the industry. Negotiations are continuing with the remaining historical customers of the Corporation, as well as with prospective new customers.

- Grande Cache Coal intends to manage production levels throughout fiscal 2010 to meet the anticipated demand for coal. This is expected to result in the curtailment of production for a series of two week periods during May, July and December.

- The Corporation anticipates capital expenditures will total approximately $67 million in fiscal 2010. This includes approximately $20 million related to the development of the No. 8 surface mine and the No. 12B2 underground mine, subject to receipt of pending regulatory approval for both mines. The anticipated capital expenditures also include the acquisition of new surface mining equipment required for the development of the No. 8 surface mine totaling approximately $28 million. The Corporation has received expressions of interest from a number of financial institutions to provide lease financing for this equipment denominated in U.S. dollars. This equipment was ordered in 2008 for delivery early in 2009 and was subsequently deferred to the fall of 2009. The fiscal 2010 capital expenditures are expected to be funded by cash flow from operations and equipment leases.

- Grande Cache Coal has received a commitment from a Canadian chartered bank to provide the Corporation with an operating credit facility of up to $25 million and the ability to enter into foreign exchange hedging arrangements.

"The outlook for global steel production in 2009 continues to be bleak" said Robert Stan, President and Chief Executive Officer. "This has resulted in reduced demand and lower prices for metallurgical coal which are being reflected in contract settlements for fiscal 2010. We continue to have a strong balance sheet and a focused operational plan and believe our company is well positioned to be successful in the current economic climate. While there is a lot of uncertainty in the metallurgical coal industry today, we believe that demand and pricing will stabilize and we continue to permit new areas, increase productivities and expand our customer base to position our company for future growth when market conditions improve."

Grande Cache Coal is an Alberta based metallurgical coal mining company whose experienced team of coal professionals are managing a mine that produces metallurgical coal for the steel industry and holds coal leases covering over 22,000 hectares in the Smoky River Coalfield located in west-central Alberta. Grande Cache Coal's common shares are listed on the Toronto Stock Exchange under the trading symbol "GCE".


In the interest of providing Grande Cache Coal's shareholders and potential investors with information regarding Grande Cache Coal, including management's assessment of Grande Cache Coal's future plans and operations, certain statements in this news release are "forward-looking statements" within the meaning of applicable Canadian securities legislation. In some cases, forward-looking statements can be identified by terminology such as "anticipate", "believe", "continue", "could", "estimate", "expect", "forecast", "intend", "may", "objective", "ongoing", "outlook", "potential", "project", "plan", "should", "target", "would", "will" or similar words suggesting future outcomes, events or performance. The forward-looking statements contained in this news release speak only as of the date of this document and are expressly qualified by this cautionary statement.

Specifically, this news release contains forward-looking statements relating to: anticipated sales volumes of metallurgical coal in fiscal 2010; management of coal production in fiscal 2010; future development activities and related capital expenditures; the capital expenditure program for fiscal 2010; and funding sources for the capital expenditure program.

These forward-looking statements are based on certain key assumptions regarding, among other things: no material disruption in production; no material variation in anticipated coal sales volumes; no material variations in markets and pricing of metallurgical coal other than anticipated variations; continued availability of and no material disruption in rail service and port facilities; no material delays in the current timing for completion of ongoing projects; financing will be available on terms favourable to the Corporation; no material variation in historical coal purchasing practises of customers; coal sales contracts will be entered into with new customers; parties execute and deliver contracts currently under negotiation; and no material variations in the current regulatory environment. The reader is cautioned that such assumptions, although considered reasonable by Grande Cache Coal at the time of preparation, may prove to be incorrect.

Actual results achieved during the forecast period will vary from the information provided herein as a result of numerous known and unknown risks and uncertainties and other factors. Such factors include, but are not limited to: changes in general economic, market and business conditions; uncertainties associated with estimating the quantity and quality of coal reserves and resources; commodity prices, currency exchange rates, the availability of credit facilities for capital expenditure requirements, debt service requirements; dependence on a single rail system; changes to legislation; liabilities inherent in coal mine development and production; competition for, among other things, capital, acquisitions of reserves, undeveloped lands and skilled personnel; geological, mining and processing technical problems; ability to obtain required mine licenses, mine permits and regulatory approvals required to proceed with mining and coal processing operations; ability to comply with current and future environmental and other laws; actions by governmental or regulatory authorities including increasing taxes and changes in other regulations; and the occurrence of unexpected events involved in coal mine development and production; and other factors, many of which are beyond the control of Grande Cache Coal. These risk factors are discussed in Grande Cache Coal's Annual Information Form for the fiscal year ended March 31, 2008, as filed with Canadian securities regulatory authorities.

There is no representation by Grande Cache Coal that actual results achieved during the forecast period will be the same in whole or in part as those forecast and Grande Cache Coal does not undertake any obligation to update publicly or to revise any of the included forward-looking statements, whether as a result of new information, future events or otherwise, except as may be required by applicable securities law.

The Toronto Stock Exchange has neither approved nor disapproved the information contained herein.

Contact Information

  • Grande Cache Coal Corporation
    Ian Bootle
    Vice President, Finance and Chief Financial Officer
    (403) 543-7070
    (403) 543-7092 (FAX)