MPAC Industries Corporation
TSX VENTURE : MPN

MPAC Industries Corporation

March 11, 2008 12:52 ET

MPAC Industries Corporation: Commencement of Limited Commercial Production at the Soma Coal Refining Plant

VANCOUVER, BRITISH COLUMBIA--(Marketwire - March 11, 2008) - MPAC Industries Corporation (the "Company" or "MPAC") (TSX VENTURE:MPN) is pleased to announce the commencement of limited commercial production at the coal refining plant (the "Plant") located on the leased site (the "Leased Site") in Soma, Turkey.

Construction at the Soma Leased Site was delayed by approximately one week due to very cold temperatures (-10c) and several centimeters of snow that fell during the later part of February. Construction was halted and all of the water supply pipes and pumps were drained due to the threat of damage caused by the freezing temperatures.

As discussed in the Company's recent News Releases, there have been several improvements and modifications made to the Plant over the last number of weeks.

While the manufacturer (the "Manufacturer") of the coal crushing circuit worked at solving the issues with the classification screens (see News Release dated February 14, 2008), several additional tailings ponds were constructed and lined. Additional product scrapers, guides, and other items were added or improved on the site. The Company has also taken delivery of the first phase of a dewatering unit and has begun incorporating it into the Plant circuit.

The Manufacturer has completed the redesign of the classification screens using Plant performance data obtained during February and early March. MPAC has temporarily halted production as of today, to allow the Manufacturer to install the replacement screen. In addition, the Manufacturer was able to fast-track the building of the second phase of the dewatering circuit and this new equipment is being delivered to the Leased Site in the next few days.

According to the previously announced Definitive Agreement (the "Agreement") dated July 17, 2007 with E.E. Madencilik Dagitim Sanay Ticareti ve Pazarlama Ltd. Sti ("E&E"), MPAC has delivered two hundred and thirty (230) tonnes of refined coal ("Refined Coal") to E&E, with pricing according to the Agreement. According to Canadian generally accepted accounting principles ("GAAP"), this revenue will be deferred and is to be recorded as an offset to capitalized development expenditures until such time as the Plant attains sixty percent (60%) of its targeted production capacity. The targeted minimum production capacity of this Plant is 400,000 tonnes annually, or 1,200 tonnes per working day.

The pre-production tonnage of Refined Coal produced over the course of the last several days has demonstrated a range of input versus output values the Plant is capable of, despite the difficulties with the classification screens. For each tonne of run-of-mine raw coal ("ROM Coal") introduced into the Plant, approximately seventy-five percent (75%) of it is reporting to the product stream - or stated another way - the Plant is producing seventy-five (75) tonnes of Refined Coal for each one hundred (100) tonnes of input ROM Coal. These results continue to confirm the results that the Company has achieved in the lab, and by way of a number of tests performed over the last several months. More importantly, this ratio is well within the financial projections contained in the Corporate Business Model.

Despite the overall restriction on the throughput of the Plant due to the classification screen issues, the Plant was able to achieve a maximum peak production of Refined Coal of forty-five (45) tonnes per hour during one recent shift.

The Company is not in a position to make any firm production forecasts for the month of March 2008 as of yet, as there continue to be start-up issues that could render these estimates meaningless. However, from the production data obtained thus far, each tonne of Refined Coal produced and delivered confirms the credibility of the technology's ability to process ROM Coal in accordance with the "start-up" phase of the MPAC Business Model.

Over the course of the coming week, the Company plans to clean up the Leased Site, and allow the Manufacturer access to the Leased Site in order to remove the original classification screens, and install the replacement screens along with the installation of the two (2) phases of the dewatering circuit.

Once the Manufacturer has completed their work, the Company is planning to restart the Plant and operate it for two eleven-hour shifts each day, with a short period between for the shift-change and whatever maintenance and further fine-tuning that may be required. All things being equal, the date anticipated for the restart of the plant is March 17, 2008.

There are several capital expenditures required on the Soma Leased Site including the payment for, and the final installation of the two phases of the dewatering unit and a drying circuit capable of handling the anticipated production tonnages. Certain redesign expenditures may also be required for the changes to the classification screens. The equipment manufacturer has also advised the Company that there may be additional water flow requirements due to the revised design of the new classification screens. In anticipation of this addition water requirement, engineers are planning the drilling of a third well on the Leased Site. These capital additions are expected to be primarily financed by way of the positive cash flow generated by the anticipated production of Refined Coal in the coming weeks and months.

While work continues on the various Plant circuit issues, Company staff and engineers are fine-tuning other areas of the Plant circuit and making several adjustments that have, and continue to come to light during the pre-commissioning and testing phases. It is important to note that as the Company moves from the conception to "pilot", and from "testing" to commercial production phases, it is anticipated that there will be start-up challenges that will require revisions to the Plant circuit to attain optimal production capacity. The lessons learned during this early period will be used in planning expansion to this Plant and will be incorporated into the construction of additional plants in the future.

Over the past nine (9) months or thereabout, several of the Directors, Officers, and Insiders have sold shares of MPAC in the open market with the primary purpose of using this cash to reinvest in Warrants and Options, thus providing a much needed capital infusion into the Company. This group may continue this practice in the future, from time to time as deemed appropriate, in order to capitalize the Company at this exciting stage of MPAC's history.

The Board of Directors, management, and staff of MPAC are now looking forward to increases in the commercial production of Refined Coal at the Soma Leased Site in the coming weeks and months.

This news release contains forward-looking statements, which are based on MPAC Industries' current internal expectations, estimates, projections, assumptions and beliefs, which may prove to be incorrect. The forward-looking statements are not guarantees of future performances and undue reliance should not be placed on them. Actual results may differ materially as a result of any number of factors and uncertainties, many of which factors are beyond the Company's control. MPAC Industries Corporation undertakes no obligation to revise any forward-looking statements except as required by applicable securities laws.

BY THE ORDER OF THE BOARD

Firoz Lakhani, President & CEO

The TSX Venture Exchange neither approved nor disapproved the contents of this news release. The TSX Venture Exchange does not accept responsibility for the adequacy or accuracy of this news release.

Contact Information

  • MPAC Industries Corporation
    J. Richard W. Hall
    Investor Relations
    (604) 644-2244
    Website: www.mpacindustries.com