SOURCE: Lotta Coal, Inc.

July 12, 2007 16:09 ET

Lotta Coal Completes First Tranche of Financing

CALGARY, AB--(Marketwire - July 12, 2007) - Lotta Coal, Inc. (PINKSHEETS: LCOL) (FRANKFURT: LC5) announced today that it has received the first tranche of funds in connection with its previously announced USD$8million financing for its operating subsidiaries Peace West Energy Corp, Lesser Slave Lake Explorations Inc., and Great Bear Explorations Inc. Concurrently with the financing, LCOL has undertaken a corporate reorganization that will enable it to gain further access to European institutional investors who have shown a strong interest in Western Canadian oil and gas plays.

In order to effect the transaction, LCOL contributed its entire interest in its three subsidiaries to a new holding company incorporated in the British Virgin Islands: Lotta Energy Corporation ("LEC"), in exchange for 110,509,716 shares of LEC. Subsequent to this transaction, Cunningham Adams, a Barbados-based investment fund, has completed its initial investment of USD$8 million into LEC.

The first tranche of $1.42 million has been received, and the balance of USD$6.58 million will be drawn by LEC according to its requirements to fund operations. The investment into LEC is convertible to shares in LCOL at the investor's option, and carries escalated warrants which will be available to the investor upon completion of its investment.

The proceeds of this investment will enable LEC to construct the pipeline and gathering system for its existing 8 proven gas wells, and immediately drill and tie in an additional 8 wells this summer. The additional 8 wells have the same high probability of success as the 8 wells drilled previously. In addition the Company plans acquire up to 25,000 acres of additional lands this summer, drill two wells and undertake a 3D seismic program to select further drilling locations on its Peace Arch property by the fall.

LEC is pursuing a new listing on the AIM market in London, which, subject to regulatory approvals and general market conditions, is expected to take effect before year end. Following such listing it is intended that LCOL will spin off its interest in LEC to its shareholders, subject to all relevant regulatory approvals.

About Lotta Coal

Lotta Coal, Inc. is a unique oil and gas company with three separate wholly owned operating subsidiaries, each with rights to explore and develop oil and gas resources in partnership with different First Nations commercial entities in Northern Alberta, Canada. The Company is publicly traded on the over-the-counter market under the Ticker symbol: LCOL:PK.

The Company has assembled over 100,000 acres of land, all with a 100% interest. It successfully drilled seven out of seven wells and re-entered a further successful well in the Boyer field, and is preparing engineering for tie-in to infrastructure and further drilling in the Boyer and Lesser Slave areas. Over $3,600,000 has been invested since September 2006 on drilling and acquisition activities.

Important Information About Forward-Looking Statements

Statements in this press release may be "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Words such as "anticipate," "believe," "estimate," "expect," "intend" and similar expressions, as they relate to the company or its management, identify forward-looking statements. These statements are based on current expectations, estimates and projections about the company's business based, in part, on assumptions made by management. These statements are not guarantees of future performance and involve risks, uncertainties and assumptions that are difficult to predict. Therefore, actual outcomes and results may, and probably will, differ materially from what is expressed or forecasted in such forward-looking statements due to numerous factors, including those described above. In addition, such statements could be affected by risks and uncertainties related to the exploration for and development of mineralized material, product demand, market and customer acceptance, competition, pricing and development difficulties, as well as general industry and market conditions and growth rates and general economic conditions. Any forward-looking statements speak only as of the date on which they are made, and the company does not undertake any obligation to update any forward-looking statement to reflect events or circumstances after the date of this release. Information on the Company's website does not constitute a part of this release.

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