Western Canadian Coal Corp.

Western Canadian Coal Corp.
NEMI Northern Energy and Mining Inc.

NEMI Northern Energy and Mining Inc.

April 11, 2006 08:45 ET

Western Canadian Coal and NEMI Northern Energy and Mining to Complete Business Combination

VANCOUVER, BRITISH COLUMBIA--(CCNMatthews - April 11, 2006) - Western Canadian Coal Corp. (TSX:WTN)(TSX:WTN.DB)(AIM:WTN) ("Western") and NEMI Northern Energy and Mining Inc. (TSX:NNE.A) ("NEMI") have entered into an agreement dated April 10, 2006 (the "Letter Agreement") to enter into a business combination such that NEMI will become a wholly-owned subsidiary of Western (the "Transaction"). Under the terms of the Letter Agreement and subject to certain conditions, Western will offer one (1) Western common share for every 1.8 common shares of NEMI (the "Exchange Ratio"). Based on both parties' respective 30-day average closing share prices, this represents a premium of 29% for NEMI's shares. Upon completion of the Transaction, Western will have approximately 115 million shares outstanding and the basic ownership split of the combined company will be approximately 73% Western and 27% NEMI. In addition, Western has made available to NEMI a trade support facility of $10 million (the "Facility") to be put in place pending completion of the Transaction.

Gary Livingstone, President and CEO of Western, stated, "We are delighted to have arrived at this mutually beneficial combination. We believe the merger creates a stronger company with a proven management team, high quality reserves and low-cost, long-life operations with access to under-utilized rail and port facilities and that significant cost synergies will be derived from merging the two companies."

Pat Devlin, President and Chairman of NEMI, added, "Combining the anticipated production of both companies will allow us to reach the strategic goal of producing 5 million tonnes per year of hard coking coal by 2007. At that level, the combined company will achieve a critical mass that will enable it to be a significant supplier to global coal customers."

Upon completion of the Transaction, the hard coking coal reserves and operations at NEMI's Trend property would be combined with Western's Burnt River pulverized coal injection ("PCI") coal and Wolverine hard coking coal reserves and operations. The combined entity will have more than 85 million tonnes ("Mt") of proven and probable coal reserves and 98 Mt of measured and indicated resources in deposits accessible to the coal processing facilities.

Additionally, the combined company would control 100% of the Belcourt and Saxon properties in northeastern British Columbia and the combination provides the opportunity to accelerate development of these properties which are currently being evaluated under a joint venture arrangement between the two companies.

The Transaction

Western and NEMI have agreed to negotiate exclusively with each other for a 30-day period and to exchange confidential information with a view to completing their due diligence investigations and settling a definitive agreement as soon as possible. If a definitive agreement is reached, it is expected to contain typical conditions for a transaction of this type, including the approval of NEMI's shareholders and all necessary regulatory and court approvals. Assuming that a definitive agreement is concluded, it is expected that the Transaction will occur by way of a Plan of Arrangement (the "Arrangement") to be approved at a special meeting of NEMI shareholders in June 2006 and that a formal information circular containing the details and conditions of the Arrangement will be mailed to NEMI shareholders in May 2006.

Under the Letter Agreement Western is entitled to a break fee of $3.5 million in certain circumstances, or $1.5 million if the board of directors of NEMI determines not to proceed with the Transaction because NEMI does not receive a favourable fairness opinion from its financial advisor.

Pursuant to the Facility provided by Western, the sum of $2.5 million will be drawn down today and the balance will be advanced upon certain conditions being met.

Western has retained Sprott Securities Inc. to act as financial advisor, and Lawson Lundell LLP to act as legal advisor, to Western. NEMI has retained Canaccord/Adams to act as financial advisor, and Borden Ladner Gervais LLP to act as legal advisor, to NEMI.

Conference Call

Messrs. Livingstone and Devlin have agreed to schedule a conference call to review and discuss the transaction following execution of the definitive agreement.

Cautionary Statements

The information in this news release contains certain forward-looking statements that involve substantial known and unknown risks and uncertainties, which are beyond Western's and NEMI's control, including the price of coal, risks relating to the exploration and development of coal deposits, and other risk factors outlined in Western's and NEMI's Annual Information Forms available on SEDAR at www.sedar.com. Western's and NEMI's actual results and performance could differ materially from those expressed in, or implied by, such forward-looking statements and, accordingly, no assurance can be given that any of the events anticipated by the forward-looking statements will transpire or occur or, if any of them do, what benefits Western and NEMI will derive from them.

This press release is neither an offer to purchase securities nor a solicitation of an offer to sell securities.

Contact Information

  • Western Canadian Coal Corp.
    Gary K. Livingstone
    President & CEO
    (604) 608-2692
    (604) 629-0075 (FAX)
    NEMI Northern Energy and Mining Inc.
    P.C. Devlin
    President and Chairman
    (604) 689-0277
    (604) 688-5210 (FAX)