Western Canadian Coal Corp.
TSX : WTN
AIM : WTN

Western Canadian Coal Corp.

July 26, 2005 09:00 ET

Western Canadian Coal Announces Accelerated Wolverine Construction Schedule and Updates on Capital Costs

VANCOUVER, BRITISH COLUMBIA--(CCNMatthews - July 26, 2005) - Western Canadian Coal Corp. (TSX:WTN)(AIM:WTN) ("WCCC" or the "Company") announces that it has accelerated the estimated completion date for the construction of the Wolverine coal preparation plant and rail load-out by six months, from early 2007 to July 2006. The accelerated construction schedule is primarily a result of a letter of intent entered into with the Sedgman group of companies, pursuant to which Sedgman will build a turnkey coal preparation plant for WCCC by July 2006. Sedgman, an international company headquartered in Pittsburgh, Pennsylvania, specializes in the design, engineering, construction and operation of coal preparation plants and material handling systems worldwide.

The plant is designed and will be built to handle 3.0 million tonnes of hard coking coal per annum, however its initial throughput will be 2.4 million tonnes. Currently, the Company's mine permit allows for the production of 1.6 million tonnes of clean metallurgical coal per annum on the Perry Creek and EB open-pit properties over an 11-year period. The Company however has applied to the BC government for an increase to the allowable production to 2.4 million tonnes per annum. A decision is expected on the application by the fourth quarter of 2005. The estimated marketable coal from the Perry Creek and EB open-pits is 15.6 million tonnes of metallurgical coal and 0.3 million tonnes of thermal coal. The Company's goal is to increase production from the Wolverine group of properties from 2.4 million tonnes per year to 3.0 million tonnes per year with the inclusion of production from future mining activities at the nearby Hermann property and the Perry Creek underground resource.

WCCC previously reported that the capital cost to construct a 2.4 million tonne capacity plant and related facilities for Wolverine would be approximately $180 million. This included approximately $27 million in pre-production stripping to remove sufficient overburden to enable the Company to mine at the rate of 1.6 million tonnes per year. With planned initial production being increased by 50%, to 2.4 million tonnes per year, pre-production stripping costs are estimated to increase to $55 million. The incremental stripping costs of $28 million would otherwise be incurred as ongoing mining costs over the life of the mine were the Company to mine at the rate of 1.6 million tonnes per year. The pre-stripping costs, combined with the costs of constructing the larger plant, are expected to bring the total Wolverine capital costs to $242 million, including contingencies of approximately $30 million.

The Company does not anticipate that further equity financings will be required to the fund these capital costs. Cash on hand, cash flow being generated from the Dillon Mine and project finance, on which the Company continues to work with its financial advisors, are anticipated to be sufficient to fund the construction of the Wolverine project and provide for the Company's remaining liquidity requirements.

Gary Livingstone, President and CEO, stated, "Being able to accelerate Wolverine's hard coking coal production and sales by six months is positive news. Half a year's production of Wolverine hard coking coal at the increased annual level of 2.4 million tonnes will result in significant and accelerated cash flow for our Company."

Forward-Looking Information

This release may contain forward-looking statements that may involve risks and uncertainties. Such statements relate to the Company's expectations, intentions, plans and beliefs. As a result, actual future events or results could differ materially from those suggested by the forward-looking statements. Readers are referred to the documents filed by the Company on SEDAR. Such risk factors include, but are not limited to, changes in commodity prices; strengths of various economies; the effects of competition and pricing pressures; the oversupply of, or lack of demand for, the Company's products; currency and interest rate fluctuations; various events which could disrupt operations; the Company's ability to obtain additional funding on favourable terms, if at all; and the Company's ability to anticipate and manage the foregoing factors and risks. Additionally, statements related to the quantity or magnitude of coal deposits are deemed to be forward-looking statements. The reliability of such information is affected by, among other things, uncertainties involving geology of coal deposits; uncertainties of estimates of their size or composition; uncertainties of projections related to costs of production; the possibilities in delays in mining activities; changes in plans with respect to exploration, development projects or capital expenditures; and various other risks including those related to health, safety and environmental matters.

WESTERN CANADIAN COAL CORP.

Gary K. Livingstone, President and Chief Executive Officer

Contact Information

  • Western Canadian Coal Corp.
    Gary K. Livingstone
    President & CEO
    (604) 608-2692
    or
    Western Canadian Coal Corp.
    Fausto Taddei
    CFO & Corporate Secretary
    (604) 608-2692
    (604) 629-0075 (FAX)
    info@westerncoal.com
    www.westerncoal.com