Cline Mining Files NI 43-101 Technical Report for the New Elk Coal Mine - 59% Increase in Measured and Indicated Coal Resources

TORONTO, July 6, 2012 /CNW/ - Cline Mining Corporation ("Cline Mining" or the "Company") (TSX:CMK) is pleased to report that it has completed and filed an updated resource estimate for the New Elk coal mine property situated in Trinidad, southern Colorado. The results of the updated resource estimate show 618.9 million tons of Measured and Indicated ("M&I") coal resource, an increase of 230.4 million tons, or 59%. The Company also has Inferred coal resources of 104.5 million tons, an increase of 81.8 million tons, or 360%.

Results of the updated resource estimate, found in the Technical Report titled "NI 43-101 Technical Report, New Elk Mine Property, Los Animas County, Colorado USA Prepared for New Elk Coal Company LLC, subsidiary of Cline Mining Corporation" (the "2012 Technical Report") prepared by Agapito Associates, Inc., are available on the Company's website at www.clinemining.com and under the Company's SEDAR profile at www.sedar.com.

The 2012 Technical Report, initially press released on May 24, 2012, provides an update from the resource reported in the NI 43-101 report titled "NI 43-101 Technical Report, New Elk Mine Project, Los Animas County Colorado, USA Prepared for New Elk Coal Company LLC, subsidiary of Cline Mining Corporation" dated May 27, 2011 (the "2011 Technical Report") by Agapito Associates, Inc. ("Agapito").

These resource increases are attributed to the agreement the Company entered into with the Department of Wildlife of the State of Colorado ("DOW"), which extended its present DOW coal mining property lease area at New Elk from 15,553 acres to 29,940 acres, a 92% percent increase in acreage. The 14,387 acre extended DOW lease also includes the recently acquired Secora Ranch, and four new coal seams connected to the initial New Elk property (see Cline's May 24, 2012 press release).

Ken Bates, CEO of Cline Mining commented, "We are very pleased with the substantial resource increase at New Elk. This latest resource update further demonstrates that the New Elk coal mine property is a significant asset that the Company expects will produce considerable amounts of coal over a very long mine life." Agapito based its evaluation on information provided by New Elk Coal Company ("NECC") a wholly-owned subsidiary of the Company, information acquired via public documents including other Technical Reports, reports authored by other technical consultants, geologic and laboratory data collected as part of NECC's 2011 and 2012 exploration drilling programs, and multiple on-site visits by Agapito report authors between October 9, 2009, and June 13, 2012. The updated resource comprises the Green, Loco, Blue, Bing Canyon Upper ("BCU"), Red, Maxwell, Apache, and Allen coal seams and covers a plan area of 34,060 acres. The updated mineral resource estimate is based on:

  • 208 historical exploration holes (more than 186,000 feet of historic reverse circulation and core drilling dating from the 1970s through mid-1990s),
  • 256 CBM wells,
  • 45 NECC exploration holes drilled in 2010-2012,
  • 4 Green seam outcrop measurements near the East portals, and
  • 1 Blue seam measurement in the East portals slope.

Estimated Coal Resources at New Elk (effective date: May 24, 2012)

SEAM MEASURED (TONS) INDICATED (TONS) MEAS. & IND. (TONS) INFERRED (TONS)
Green 31.9 27.5 59.4 0.1
Loco 14.4 30.0 44.3 26.6
Blue 52.2 38.1 90.3 0.9
BCU 12.8 36.8 49.6 30.0
Red 23.3 10.3 33.6 0.0
Maxwell 72.1 71.7 143.8 17.4
Apache 50.3 56.8 107.1 15.4
Allen 42.8 47.9 90.7 14.1
TOTALS 299.8 319.1 618.9 104.5

The total seam and parting thickness for each seam were generated using grids consisting of 200-foot-square blocks.  Grid thickness values were estimated from neighboring drill holes (point data) using a kriging algorithm.  The kriging method was selected because it provides the most reliable, statistically unbiased estimator where abundant spatial data are available.  Coal tonnages are based on an in-situ coal bulk density of 85 pounds per cubic foot (pcf), corresponding to the bulk density suggested by the GSC (1989) for a high-volatile bituminous coal with approximately 10% dry basis ash.

The New Elk Mine seams are of sufficient quality to be classified as low sulfur, high-volatile, B bituminous coal, with low to moderate phosphorus and alkali content.  The coal can be marketed as a high-ash metallurgical grade coal, a PCI coal, or a thermal coal.

Additional potential resources have been identified in the extended DOW lease, which are contiguous to the above resource but require future definition by additional drilling. Coal quality parameters were gridded based on quality testing conducted on core from the 2010-2012 exploration drilling programs.  An inverse distance squared (ID2) algorithm was used for this purpose because insufficient data points were available to support kriging.  Parameters modeled include wash recovery, ash, sulfur, Btu per pound, volatile matter, FSI, P2O5 in ash, mean maximum vitrinite reflectance, and maximum fluidity.

The 2012 Technical Report includes the following excerpt respecting the Preliminary Economic Assessments ("PEAs"). "PEAs were completed in 2010 and 2011 on the basis of a preliminary multi-seam mine plan for assessing the economic viability of the project.  The preliminary mine plans indicate that there is adequate resource to support over 20 years of operation at 3 million tons of saleable coal per year.  The mine plans assume room-and-pillar mining with pillar extraction (secondary mining) in the Blue, Maxwell, Apache, and Allen coal seams.  The 2011 PEA estimated capital and operating costs are summarized in Table 1-3 of the report.  Production revenue is based on coal sales pricing projected by Wood Mackenzie, Inc. (2011).  The PEA has a pre-tax Net Present Value (NPV) of US$1.4 billion at a 10% per annum (p.a.) discount rate, a payback period of 1.7 years, and an Internal Rate of Return (IRR) of 98%. Mineral resources that are not mineral reserves do not have demonstrated economic viability.

Project risks with potential to impact the project's economics include: future coal sales pricing; unpredicted mining conditions; inability to hire an adequate number of qualified employees; excessive delays of regulatory approvals from state or federal agencies; and increased costs or delays in acquiring ownership or rights to third party properties assumed obtained for the PEA, which could include water rights, surface properties, and gas wells.

The Company is presently reviewing the optimization of the New Elk Mine, as announced in a press release dated July 3, 2012.

Qualified Persons: Dennis Z. Mraz, P.Eng. of New Elk Coal Company LLC and Timothy Ross, P.E., of Agapito Associates, Inc., both qualified persons within the meaning of NI 43-101, have reviewed and approved the technical information in this news release.

About Cline: Cline has metallurgical coal property interests in British Columbia and in Colorado, U.S.A. with NI 43-101 independent Technical Reports. Cline Mining Corporation is focused on the exploration and development of metallurgical steel making coals in Canada and the U.S., and on its iron ore property in Madagascar and its Cline Lake gold property in northern Ontario, Canada.

Head office:  Brookfield Place, 181 Bay Street, 3rd Floor, Clarkson Gordon Heritage Building, Toronto, ON, M5J 2T3

Forward-Looking Information

This press release contains forward-looking statements (including "forward-looking information" within the meaning of applicable Canadian securities legislation and "forward-looking statements" within the meaning of the US Private Securities Litigation Reform Act of 1995) relating to, among other things, the operations of the Company, the environment in which it operates and the Company's future financial and operating performance. Generally, forward-looking statements can be identified by the use of words such as "plans", "expects" or "does not expect", "is expected", "budget", "scheduled", "estimates", "forecasts", "intends", "anticipates" or "does not anticipate", or "believes", or variations of such words and phrases or statements that certain actions, events or results "may", "could", "would", "might" or "will be taken", "occur" or "be achieved".  Such statements are based on assumptions, estimates, forecasts and projections made in light of the trends, conditions and expected developments that are considered to be relevant and reasonable in the circumstances at the date that such statements are made.  Forward-looking statements are not guarantees of future performance and such information is inherently subject to known and unknown risks, uncertainties and other factors that are difficult to predict and may be beyond the control of the Company.  A number of factors and assumptions may cause actual results, level of activity, performance or outcomes of the Company to be materially different from those expressed or implied by such forward-looking statements including, without limitation, the future price of coal, the estimation of mineral reserves and resources, capital, operating and exploration expenditures, costs and timing of future exploration, requirements for additional capital, government regulation of mining operations, environmental risks, reclamation expenses, title disputes or claims, limitations of insurance coverage and the timing and possible outcome of pending litigation and regulatory matters and other risks set forth in other public filings of the Company.  Consequently, undue reliance should not be placed on such forward-looking statements. In addition, all forward-looking statements in this press release are given as of the date hereof. The Company disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, save and except as may be required by applicable securities laws.

SOURCE Cline Mining Corporation

For further information:

Ken Bates, President and CEO
Office: (416) 504-7600
Email: kbates@clinemining.com

Belinda Labatte Greg DiTomaso
The Capital Lab
Office: (647) 438-2193
Email: investor@clinemining.com

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Cline Mining Corporation

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