Marimba Capital Corp.
TSX VENTURE : MRA.P

May 06, 2008 09:00 ET

Marimba Capital Corp. to Merge With Phoenix Coal Corporation

VANCOUVER, BRITISH COLUMBIA--(Marketwire - May 6, 2008) -

NOT FOR DISSEMINATION IN THE UNITED STATES OR FOR DISTRIBUTION TO U.S. NEWSWIRE SERVICES AND DOES NOT CONSTITUTE AN OFFER OF THE SECURITIES DESCRIBED HEREIN

Marimba Capital Corp. (TSX VENTURE:MRA.P) (the "Corporation") is pleased to announce that it has entered into a letter of intent with Phoenix Coal Corporation ("Phoenix") dated May 5, 2008 to merge with Phoenix (the "Qualifying Transaction"). An equity financing of approximately $75 million (the "Financing") is intended to be completed in connection with the Qualifying Transaction.

Phoenix is a private Delaware corporation engaged in the exploration, production, acquisition and sale of coal from the Illinois Basin to utilities and industrial fuel consumers. As at December 31, 2007, Phoenix had 113,316,000 tons of measured and indicated resources and 43,652,000 tons of proven and probable coal reserves. During 2007, Phoenix produced approximately 2.1 million tons of saleable coal from its owned and controlled mines. Information in this press release relating to mineral resources or reserves is derived from the technical report prepared by Marshall Miller & Associates, Inc. dated March 5, 2008, entitled "Technical Report on the Coal Properties of Phoenix Coal Corporation in West Kentucky, USA, for Phoenix Coal Corporation, Louisville, KY" and is as of December 31, 2007.

The Corporation is a capital pool company and intends for the acquisition of Phoenix to constitute its Qualifying Transaction as such term is defined in the policies of the TSX Venture Exchange (the "Exchange"). The Qualifying Transaction is not a non-arm's length transaction pursuant to the policies of the Exchange.

Shareholders' Meeting

Since the Qualifying Transaction is not a non-arm's length transaction, the Corporation is not required to obtain shareholder approval of the Qualifying Transaction. However, the Corporation will hold a special meeting of shareholders to approve, among others, the following matters: (i) the consolidation of its common shares on the basis of one new share for each 2.35 existing shares, such that the Qualifying Transaction can be effected on a one-for-one share basis; (ii) a name change of the Corporation to "Phoenix Natural Resources Corporation"; (iii) the continuation of the Corporation under the Business Corporations Act (Ontario); and (iv) the adoption of a new stock option plan.

Term of Acquisition

Pursuant to the terms of the letter of intent, completion of the Qualifying Transaction will be subject to a number of conditions, including execution of a definitive merger agreement, completion of satisfactory due diligence and receipt of applicable regulatory and shareholder approvals. There can be no assurance that the Qualifying Transaction will be completed as proposed or at all.

The Qualifying Transaction will be completed by way of a reverse triangular merger of a wholly-owned subsidiary of the Corporation, to be incorporated for the purposes of the Qualifying Transaction, and Phoenix under Delaware corporations law whereupon the stockholders of Phoenix will receive one common share of the Corporation (on a post-consolidated basis) for each share of common stock of Phoenix. Phoenix shareholders will also be provided with the option to complete a direct share exchange with the Corporation immediately prior to the merger, on the same terms as the merger.

Phoenix currently has 38,109,603 shares of common stock issued and outstanding and 37,190,267 shares of preferred stock issued and outstanding. Phoenix also has options and warrants issued and outstanding to acquire an aggregate of 8,530,000 shares of common stock and currently has an $11 million loan outstanding which is convertible into shares of common stock of Phoenix under certain conditions at the option of the holder, at a price to be determined in accordance with the loan terms. All of the issued and outstanding shares of preferred stock of Phoenix will convert into shares of common stock of Phoenix on the basis of one share of common stock for each one share of preferred stock basis immediately prior to the closing of the merger. Assuming that the Qualifying Transaction closes on June 30, 2008, and taking into account the payment of dividends in specie as at June 30, 2008, an aggregate of 39,399,465 shares of preferred stock of Phoenix will be issued and outstanding. Any outstanding option, warrants and similar rights to acquire shares of Phoenix will be exchanged for analogous options, warrants and similar right to acquire common shares of the Corporation, subject to compliance with the policies of the Exchange.

Upon the completion of the Qualifying Transaction, Phoenix will be a wholly-owned subsidiary of the Corporation.

Trading of the securities of the Corporation will be halted until the completion of the Qualifying Transaction.

Description of Phoenix Coal Corporation

All information in this press release relating to Phoenix is the sole responsibility of Phoenix.

Phoenix is engaged in the exploration, production and sale of steam coal to utilities and industrial fuel consumers. Phoenix's coal properties are located within the Western Kentucky Coal Field of the Illinois Basin in the interior midwest region of the United States. As of December 31, 2007, Phoenix controlled 43,652,000 tons of proven and probable coal reserves and 113,316,000 tons of measured and indicated coal resources.

From June 2006 through January 2007, Phoenix acquired Schoate Mining Company LLC indirectly, which owns the Briar Hill mine that is currently in production; R&L Winn, Inc., which owns the Back in Black mine that is currently in production, the Stony Point reserve that is currently in production, certain other assets including the Vogue North area, the Brier Creek area, the River Queen area, the Star area, the Graham #5 Mine that is currently in production and the Island Dock facility, which provides Phoenix with access to low-cost barge transportation for its nearby mining operations.

The Briar Hill mine is an active surface mining operation with 4,473,000 tons of proven and probable coal reserves comprised of the Kentucky #10, #11 and #12 seams. The Back in Black mine is an active surface mining operation with 822,000 tons of proven coal reserves comprised of the Kentucky #9 seam. The Graham #5 mine is an active surface mining operation with 660,000 tons of proven and probable coal reserves comprised of the Kentucky #9 seam. In addition, Phoenix is currently mining the Stony Point reserve, which is expected to be depleted by May 2008. Phoenix is also actively permitting the other Charolais reserves which total 8,067,000 tons of proven coal reserves and 833,000 tons of measured coal resources.

In September 2007, Phoenix entered into a management and administrative services agreement with C&R Coal Company, Inc. ("C&R"). Under the agreement, Phoenix operates and manages C&R's Beech Creek South and Ebeneezer mines, which collectively have 697,000 tons of proven coal reserves.

In October 2007, Phoenix acquired the membership interests in PACT Resources, LLC ("PACT"). Through the acquisition of PACT, Phoenix gained control of the leases for the proposed Pratt mine and the Panama South property. The proposed Pratt mine contains both underground and surface coal totaling 33,833,000 tons of measured and indicated resources, 670,000 tons of inferred resources and 28,933,000 tons of proven and probable reserves. Phoenix has been carrying out development work on the proposed Pratt mine since the fourth quarter of 2006 and is in the process of permitting the reserve. In December 2007, Phoenix leased the Panama South property from Penn Virginia Operating Co. Panama South contains both underground and surface coal totaling 76,287,000 tons of measured and indicated resources.

During 2007, Phoenix produced approximately 2.1 million tons of saleable coal from its owned and controlled mines. The Briar Hill and Graham #5 mines produced approximately 1.5 million tons of coal, or about 72% of Phoenix's production for the year. Phoenix experienced an appreciable increase in production throughout the year with the second half of the year's production outpacing the first half by nearly 200,000 tons.

Information in this press release relating to mineral resources or reserves is derived from the technical report prepared by Marshall Miller & Associates, Inc. dated March 5, 2008, entitled "Technical Report on the Coal Properties of Phoenix Coal Corporation in West Kentucky, USA, for Phoenix Coal Corporation, Louisville, KY" and is as of December 31, 2007. The mineral resource and reserve estimates have been prepared by Mr. Scott Nelson, C.P.G of Marshall Miller & Associates, a qualified person, as such term is defined in National Instrument 43-101. Mr. Scott Nelson is independent of Phoenix.

The following table provides a summary of the Phoenix mineral resource estimates as at December 31, 2007. The mineral resources have been estimated exclusive of reserves and are reported herein on an in-situ basis. None of the resources areas have been permitted.



Summary of Resources (Tons x 1,000)

---------------------------------------------------------------------------
Total Resource (in-situ)
Mining -------------------------------------
Area Type Measured Indicated Total Inferred
---------------------------------------------------------------------------
Panama South Property Deep 36,598 25,607 62,205 0
---------------------------------------------------------------------------
Panama South Property Surface 8,816 5,266 14,082 0
---------------------------------------------------------------------------
Proposed Pratt Mine Deep 1,451 3,773 5,225 667
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Proposed Pratt Mine Area Surface 12,891 15,718 28,609 3
---------------------------------------------------------------------------
River Queen Area Surface 311 0 311 0
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Star Area Surface 522 0 522 0
---------------------------------------------------------------------------
KO Area Surface 2,340 22 2,362 1,867
---------------------------------------------------------------------------
By Mining Type Surface 24,881 21,005 45,886 1,871
Deep 38,050 29,380 67,430 667
---------------------------------------------------------------------------
---------------------------------------------------------------------------
Total 62,930 50,385 113,316 2,538
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The following table provides a summary of the Phoenix mineral reserve estimates as at December 31, 2007. Other than as set forth in the notes to the table below, none of the reserve areas are permitted.



Summary of Reserves (Tons x 1,000)

---------------------------------------------------------------------------
Total Reserves (Moist Recoverable Basis)
------------------------------------------
Assigned Unassigned
----------------------------------
Mining
Area Type Proven Probable Proven Probable Total
---------------------------------------------------------------------------
Proposed Pratt Mine Deep 0 0 12,240 16,693 28,933
---------------------------------------------------------------------------
Brier Creek Area Deep 0 0 2,638 0 2,638
---------------------------------------------------------------------------
River Queen Area Surface 0 0 1,224 0 1,224
---------------------------------------------------------------------------
Vogue North Area Surface 0 0 3,775 430 4,205
---------------------------------------------------------------------------
Beech Creek South Surface 697 0 0 0 697
---------------------------------------------------------------------------
Briar Hill Mine Surface (1) 1,252 0 0 0 1,252
---------------------------------------------------------------------------
Briar Hill Mine Surface 3,220 1 0 0 3,221
---------------------------------------------------------------------------
Graham #5 Surface (1) 652 8 0 0 660
---------------------------------------------------------------------------
Back in Black Mine Surface (1) 144 0 0 0 144
---------------------------------------------------------------------------
Back in Black Mine Surface 678 0 0 0 678
---------------------------------------------------------------------------
By Mining Type Surface 6,643 9 4,999 430 12,081
Deep 0 0 14,878 16,693 31,571
---------------------------------------------------------------------------
---------------------------------------------------------------------------
Total 6,643 9 19,877 17,123 43,652
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Notes: (1) Permitted Area


Insiders and Board of Directors of the Resulting Issuer

Upon completion of the Qualifying Transaction, it is anticipated that management of the resulting issuer will include the persons identified below. The board of directors of the resulting issuer will be increased to seven (7) directors and composed of the nominees of Phoenix, of which four (4) directors will be independent. Additional proposed directors and officers of the resulting issuer will be identified at a later date.

Background on New Officers and Directors

David Wiley - President and Chief Executive Officer

Mr. Wiley founded Phoenix in 2004 and has served as a director and Chief Executive Officer of Phoenix since that time. Prior to joining Phoenix, Mr. Wiley was a Managing Director with MHI Energy Partners, an energy private equity fund that invests in oil and gas, coal and energy technologies. Immediately prior to joining MHI Energy Partners, he served as Chief Investment Officer of Labrador Capital Management LLC, an investment firm that he co-founded in 1996 to advise a New York based hedge fund. Mr. Wiley has over 16 years experience as an entrepreneur, executive manager and portfolio manager.

Matthew Haaga - Chief Operating Officer

Mr. Haaga has twenty-eight years of senior management experience with a number of coal companies in the Illinois Basin. His responsibilities included management, frontline supervision and directorships. Prior to joining Phoenix in May 2007, Mr. Haaga had worked as a private mining and management consultant for four years.

Dustin Angelo, Chief Financial Officer

Mr. Angelo has served as Chief Financial Officer of Phoenix since August 2006 where he has assisted Phoenix in integrating acquisitions, transitioning to a common accounting platform and developing the financial reporting infrastructure. Prior to joining Phoenix, he was with MHI Energy Partners, an energy private equity fund that invests in oil and gas, coal and energy technologies. From 1997 to 2005, Mr. Angelo was a Principal at Waller Capital Corporation in New York City, a boutique investment bank focusing on mergers and acquisitions. Mr. Angelo earned a BSBA in Accounting and International Business from Georgetown University and a MBA from Columbia Business School. Mr. Angelo is a Certified Public Accountant licensed in Kentucky.

Sponsorship of Qualifying Transaction

Sponsorship of a qualifying transaction of a capital pool company is required by the Exchange unless exempt in accordance with the Exchange policies. The Corporation is currently reviewing the requirements for sponsorship and may apply for an exemption from the sponsorship requirements pursuant to the policies of the Exchange, however there is no assurance that the Corporation will ultimately obtain this exemption.

The Corporation will make a subsequent press release of information regarding sponsorship, summary financial information, and details of the Financing.

As noted above, completion of the Qualifying Transaction is subject to a number of conditions, including but not limited to, acceptance by the Exchange and approval of the shareholders of Phoenix. Where applicable, the Qualifying Transaction cannot close until the required approvals have been obtained. There can be no assurance that the Qualifying Transaction will be completed as proposed or at all.

Investors are cautioned that, except as disclosed in the filing statement to be prepared in connection with the transaction, any information released or received with respect to the Qualifying Transaction may not be accurate or complete and should not be relied upon. The trading in the securities of the Corporation should be considered highly speculative.

FORWARD-LOOKING STATEMENTS

Certain information set forth in this press release contains "forward-looking statements", and "forward-looking information" under applicable securities laws. Except for statements of historical fact, certain information contained herein constitutes forward-looking statements which include management's assessment of Phoenix's future plans and operations and are based on Phoenix'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 Phoenix'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, but are not limited to: liabilities inherent in coal mine development and production; geological, mining and processing technical problems; Phoenix's inability to obtain required mine licenses, mine permits and regulatory approvals required in connection with mining and coal processing operations; dependence on third party coal transportation systems; competition for, among other things, capital, acquisitions of reserves, undeveloped lands and skilled personnel; incorrect assessments of the value of acquisitions; changes in commodity prices and exchange rates; changes in the regulations in respect to the use of coal; the effects of competition and pricing pressures in the coal market; the oversupply of, or lack of demand for, coal; currency and interest rate fluctuations; various events which could disrupt operations and/or the transportation of coal products, including labor stoppages and severe weather conditions; the demand for and availability of rail, port and other transportation services; and management's ability to anticipate and manage the foregoing factors and risks. There can be no assurance that forward-looking statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Phoenix undertakes no obligation to update forward-looking statements if circumstances or management's estimates or opinions should change except as required by applicable securities laws. The reader is cautioned not to place undue reliance on forward-looking statements.

The securities described in this press release have not been and will not 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 a U.S. person absent an available exemption from the registration requirements of such Act.

The TSX Venture Exchange Inc. has in no way passed upon the merits of the proposed transaction and has neither approved nor disapproved the contents of this press release.

Contact Information

  • Marimba Capital Corp.
    A. Murray Sinclair
    President and Chief Executive Officer
    (604) 689-1428
    (604) 681-4692 (FAX)
    or
    Phoenix Coal Corporation
    David A. Wiley
    President and Chief Executive Officer
    (502) 587-5900