MPAC Industries Corporation
TSX VENTURE : MPN

MPAC Industries Corporation

September 11, 2008 09:27 ET

MPAC Industries Corporation: Corporate Update-Soma

VANCOUVER, BRITISH COLUMBIA--(Marketwire - Sept. 11, 2008) - MPAC Industries Corporation ("MPAC" or the "Company") (TSX VENTURE:MPN) is pleased to provide its shareholders and the investment community with a corporate update concerning the coal refining pilot plant (the "Pilot Plant") located in the City of Soma in Turkey and the next steps that the Company anticipates.

RESOLUTION OF SCREENING

The Company is pleased to advise that recent on-site visits in Turkey by two Directors with the screen manufacturer that was recommended to the Company and, subsequently, successfully tested by MPAC to resolve the screening problems experienced at the Pilot Plant, has resulted in MPAC starting the process of placing an order for two new screens for retrofitting into the existing Pilot Plant circuit.

The new screens (the "Screens"), which will be delivered and installed by the manufacturer, are similar to the screen used for the tests that were announced in the August 6, 2008 News Release. The screen manufacturer, because of its interest in the Company's endeavours, has very graciously allowed MPAC to provide favourable purchase terms for the Company to acquire and have the Screens installed at the Pilot Plant.

MPAC expects the screens to be delivered to the Pilot Plant by on or around the end of this month, September 2008.

In conjunction with delivery of the Screens, the Company will be retrofitting various crushing components of the Pilot Plant as well as incorporating the pre preparation of the input coal in order to test and then commence commercial production at the Pilot Plant.

Other things being equal, the Company expects to be in limited production at the Pilot Plant in the early part of October of 2008.

PROJECTED GROSS REVENUE AND EBITDA

In anticipation of the production tonnage suggested by the consultants, MPAC has prepared a very conservative financial projection (the "Financial Projections") on what this initial production run will mean in terms of gross revenue and the EBITDA.

In preparing the Financial Projections, the Company is assuming that there will be a very gradual ramp up in production. For the first quarter, MPAC is factoring in some twenty (20) tonnes of head coal being processed per hour (instead of the suggested thirty (30) tonnes per hour). During this first quarter, the Financial Projections factor in that the Pilot Plant will operate only ten (10) hours a day instead of twenty-four (24) hours per day. The efficiency factor is set at 80% based on the past performance of the coal refining technology.

For the second quarter, twenty five (25) tonnes of coal are assumed to be processed, with the Pilot Plant running fifteen (15) hours a day; and for the balance of the year, that is, the last two quarters of the year, the operation is deemed to handle thirty (30) tonnes per hour, running twenty (20) hours per day.

The parameters for the Financial Projections will, other things being equal, allow for any time loss due to additional fine-tuning that may be required in the initial stages.

The projected gross revenues and EBITDA (expressed in US$k) are as shown below.



US$ '000 Q1 Q2 Q3 Q4
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Gross Revenue 734 1,377 2,203 2,203
Operating Costs 410 770 1,231 1,231
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EBITDA 396 607 972 972
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It should be noted that as production increases, the operating costs per tonne would decrease and favourably enhance the bottom line accordingly.

EXISTING TURNKEY CRUSHING PLANT CIRCUIT

Since delivery and installation of the turnkey crushing and screening component of the Pilot Plant circuit in the first quarter of 2008, which included a jaw crusher, a hammer crusher, a tertiary crusher, a bunker, a screen and conveyor belts, the Company has experienced many problems with the performance of the manufacturer's equipment in relation to coal processing. Despite requests by the Company to the manufacturer, little has been provided by the manufacturer to resolve the crushing and screening problems.

Consequently, MPAC has issued a demand letter to the manufacturer to return all the funds paid by MPAC to the manufacturer for breach of contract and non performance of the crushing and screening components in relation to the processing of coal at its Pilot Plant.

To that end, the Company's legal counsel in Turkey has issued an appropriate demand letter to the manufacturer. Should the manufacturer fail to respond appropriately, then the Company intends to commence legal proceedings against the manufacturer and seek to be appropriately recompensed.

In the interim, in order to commence economic daily production, the Company has received recommendations to retrofit various aspects of the crushing and screening aspects of the Pilot Plant to achieve the refined coal tonnage projected above. These recommendations will be implemented in the coming weeks pending delivery of the Screens.

It is anticipated that the Canadian Contractor will be returning to Turkey shortly to oversee the retrofitting of the Pilot Plant and the installation of the Screens.

FUTURE CRUSHING REQUIREMENTS

The Company has identified a state of the art crushing manufacturer in Turkey. Numerous visits have been made to their manufacturing facility in anticipation of placing an order for a ball mill that will crush raw coal to a consistent standard size as input material to the Coal Refining component of MPAC's future coal refining plants in Turkey. As well, the Company plans to incorporate such a ball mill at the Pilot Plant at a future date, thereby increasing the level of production at the Pilot Plant.

MPAC is very pleased to have the opportunity to develop a relationship with this ball mill manufacturer as it plans for its next coal refining operation, in addition to the Pilot Plant in Soma.

Simultaneously, MPAC is in advanced negotiations with a local Turkish group that expressed a strong interest in funding the Company on a non-dilutive basis. This potential investor group has already witnessed the Pilot Plant's ability to refine coal, has accompanied the Company's representatives and a Director to the ball mill manufacturer and the new screen manufacturer.

In the event that a mutually acceptable accommodation is arrived at in the immediate future, an order for a ball mill will be placed as well as the ancillary equipment required.

Should negotiations with this local Turkish investor group not be consummated, MPAC will use the revenues from the Pilot Plant to move forward with plans to add a ball mill to the Pilot Plant and then commission blueprints for a new coal refining plant that will include a ball mill, the new screen methodology and the Canadian technology required to refine the coal.

NEW COAL DEPOSIT

On its most recent trip to Turkey, a senior executive of MPAC visited the location of the proposed next coal deposit that could be the subject of a Memorandum of Understanding. The new coal deposit is located very close to both road and rail transportation, power is available locally and the characteristics of the coal are particularly suitable to the Company's coal refining process.

Once the Pilot Plant is producing revenue, the Company intends to enter into negotiations to acquire the rights to this recommended coal deposit.

CURRENT COAL MARKET IN TURKEY

Last month, it was announced that China has concluded negotiations to purchase substantial quantities of the Russian coal available for export. That announcement has caused a ripple effect in Turkey and other countries that rely on coal imports for their domestic and industrial sectors. This announcement, coupled with custom clearance bottlenecks in Russia, has further put pressure on the supply of coal to the Turkish market. The cement industry, the main target market for the Company's refined coal, is paying a premium to secure a stable supply of coal between 4,500 and 5,000 Kcals.

Consequently, MPAC's business model continues to be supported by both internal and external market forces affecting Turkey and its coal resources.

This News Release contains forward-looking statements, which are based on MPAC Industries Corporation 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

J. RICHARD W. HALL, 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.

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