Grande Cache Coal Corporation
TSX : GCE

Grande Cache Coal Corporation

January 28, 2005 18:39 ET

Grande Cache Coal Corporation Update

CALGARY, ALBERTA--(CCNMatthews - Jan. 28, 2005) - (GCE-TSX) Grande
Cache Coal Corporation ("Grande Cache" or the "Company") has recently
completed its first quarter of operations following the reactivation of
mining operations in the Smoky River Coalfield and is now in a position
to provide the following update:

- For the fiscal year ended March 31, 2005, coal sales volume is
estimated at 0.4 million tonnes, cost of sales is expected to be
approximately $115 per tonne and capital expenditures are anticipated
to be $32 million.

- Coal sales volume for the fiscal year ended March 31, 2006 ("FY
2006") is estimated to be 2.0 million tonnes, consisting of 0.2 million
tonnes of metallurgical coal contracted at US$64 per tonne, 1.5 million
tonnes of metallurgical coal at US$125 per tonne and 0.3 million tonnes
of non-metallurgical coal at prices yet to be determined.

- Average cost of sales for FY 2006 is anticipated to be $65 to $70 per
tonne. Higher costs are anticipated during the first half of FY 2006 as
the development of the No. 12S B2 surface mine and the refurbishment of
the process plant are completed. Sustaining capital expenditures for FY
2006 are estimated at $10 million for further process plant
enhancements, underground equipment and resource definition drilling.

- The anticipated operating performance for FY 2006 recognizes that the
Company along with the Canadian resource industry is facing increasing
cost pressures due to higher wage rates, increased energy and material
costs and competition for the services of contractors and consultants.
- The Board of Directors has approved the preparation of a
comprehensive feasibility study for the staged expansion of
metallurgical coal production to four million tonnes per year. It is
anticipated that the feasibility study will be completed before the end
of FY 2006 at an estimated cost of $5 million.

"Grande Cache continues to make progress in establishing a viable,
long-term operation," said Robert Stan, President and Chief Executive
Officer of Grande Cache. "We expect to be operating at an annualized
production rate of two million tonnes in fiscal 2006 and believe that
our resource and customer demand will support the expansion of our
operation".

Mr. Stan continued, "The start-up process has taken longer and cost
more than first anticipated. Rail transportation shortfalls have
resulted in a build-up of mine site inventories and delays in the
delivery of coal to our customers. Improvement of rail service will be
critical to meeting our sales targets. Our surface mine contractor has
also experienced start-up difficulties during the development phase of
the surface operations. I am confident that these rail and operational
issues will be resolved as we build a long-term mine development based
on our significant coal resource".

Grande Cache is an Alberta based metallurgical coal mining company
whose experienced team of coal professionals is developing a long-term
mining operation to produce metallurgical coal for the export market
from Grande Cache's coal leases covering over 15,000 hectares in the
Smoky River Coalfield located in west-central Alberta. Grande Cache's
common shares are listed on the Toronto Stock Exchange under the
trading symbol "GCE".

This news release contains certain forward-looking statements, which
are based on Grande Cache's current internal expectations, estimates,
projections, assumptions and beliefs, which may prove to be incorrect.
Some of the forward-looking statements may be identified by words such
as "expects", "anticipates", "believes", "projects", "plans" and
similar expressions. These statements are not guarantees of future
performance and undue reliance should not be placed on them. Such
forward-looking statements necessarily involve known and unknown risks
and uncertainties, which may cause Grande Cache's actual performance
and financial results in future periods to differ materially from any
projections of future performance or results expressed or implied by
such forward-looking statements. These risks and uncertainties include,
among other things, 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, capital expenditures and 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. Many of these risks and uncertainties
are described in Grande Cache's 2004 Annual Information Form, Grande
Cache's Management's Discussion and Analysis and other documents Grande
Cache files with the Canadian securities authorities. Copies of these
documents are available without charge from Grande Cache or may be
accessed on Grande Cache's website (www.gccoal.com) or on the website
maintained by the Canadian securities regulatory authorities
(www.sedar.com).

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

Contact Information

  • Grande Cache Coal Corporation
    Robert H. Stan
    President and Chief Executive Officer
    (403) 543-7070
    or
    Grande Cache Coal Corporation
    Thomas E. Pierce
    Vice President, Finance and Chief Financial Officer
    (403) 543-7070
    or
    Grande Cache Coal Corporation
    Suite 250, 703 - 6th Avenue S.W.
    Calgary, Alberta, T2P 0T9, Canada
    (403) 543-7092