Coalcorp announces commencement of strategic alternatives review process and results of updated NI 43-101 technical report



    TORONTO, Aug. 4 /CNW/ - Coalcorp Mining Inc. ("Coalcorp" or the
"Company") (TSX-CCJ) announces that it has commenced a strategic alternatives
review process to realize value for the Company and its stakeholders. The
Board of Directors of the Company (the "Board") and management firmly believe
that the current market value of the Company does not reflect the value of the
Company's assets, as supported by the results of its most recently completed
and filed National Instrument 43-101 technical report. Accordingly, the
Company has initiated a process to consider various strategic alternatives to
maximize the value of Coalcorp's assets, including but not limited to, the
possible sale of the La Francia mine and associated infrastructure assets and
other potential corporate transactions. The Board has established a Special
Committee of directors independent of management and the Company's significant
shareholder, to oversee the strategic review process and make recommendations
to the Board. The directors appointed to the Special Committee are Dick
Lister, Chairman, Bruce Barraclough and Charles Entrekin.
    Pala Investments Holdings Limited, which holds approximately 44% of
Coalcorp's outstanding shares, is supportive of the strategic alternatives
review process and is not represented on the Special Committee.
    The Company is currently in discussions with multiple interested parties
and is exploring various possible alternative transactions and proposals with
the aim of maximising the value of Coalcorp's assets. The Special Committee
will review and evaluate all possible alternative transactions and make
recommendations to the Board.

    
    Results of Updated National Instrument 43-101 Report
    ----------------------------------------------------
    

    As previously announced, the Company engaged SRK Consulting to update its
current National Instrument 43-101 technical report in respect of La Francia I
Blocks ABB' (including B Prima) to include La Francia II and Blocks CD and to
provide an updated life-of-mine plan (the "Updated Technical Report"). The
Company completed and filed the Updated Technical Report on August 4th, 2009.
The Updated Technical Report provides support as to the underlying value of
the La Francia assets. The key highlights of the Updated Technical Report are
set out below:

    
    -   Over 60 million tonnes (Mt) of total reserves and approximately
        145 Mt of total resources
    -   Annual mine production of approximately 3.0 Mt of coal over 20 years
    -   Approximate net present value of the La Francia mine of
        USD$404 million under a self perform mining scenario and
        USD$374 million under a contractor mining scenario based on an 8%
        discount rate and long-term net coal prices of USD$66.00 per tonne.

    La Francia In Situ Reserves and Resources (in tonnes)(1)

    -------------------------------------------------------------------------
                 Reserves                    Resources(2)
    -------------------------------------------------------------------------
    Blocks    Proven    Average in    Measured       Indicated  Average in
                        situ quality                            situ quality
                        (CV - Btu.lb)                           (CV - Btu.lb)
    -------------------------------------------------------------------------
    ABB       21.54 Mt  11,231        40,520,000     3,400,000  11,185
    -------------------------------------------------------------------------
    C&D       38.76Mt   11,162        98,465,000     2,650,000  10,982
    -------------------------------------------------------------------------
    Total     60.3 Mt                 138,985,000    6,050,000
    -------------------------------------------------------------------------
    1.  The effective date for these estimates is June 1, 2009.
    2.  Mineral resources that are not mineral reserves do not have
        demonstrated economic viability.
    

    "The results in the Updated Technical Report as well as valuation
benchmarks established in recent coal mining transactions in Colombia
underscore the clear disconnect between the Company's current market value and
the fundamental value of its mining and transportation assets. The Company's
initiation of a strategic alternatives review process is intended to unlock
and maximize value for Coalcorp stakeholders, which is not reflected in the
Company's current market value", said Joseph Belan, Chief Executive Officer of
Coalcorp.
    The Updated Technical Report was prepared under the supervision of Paul
Bright, BSc, C. Eng, Jon Woolliscroft, BSc, C. Eng, Stephen Rhodes, Phd, FGS
and Richard Oldcorn, MSc, CGeol each a qualified person for the purposes of
National Instrument 43-101. A copy of the Updated Technical Report is
available on the SEDAR website at www.sedar.com and the Company's website at
www.coalcorp.ca.

    
    Update on Q2 and Q3 Financials
    ------------------------------
    
    As previously announced and updated in the Company's bi-weekly Default
Status Reports, the Company is delayed in the filing of its second quarter
interim financial statements and related management discussion and analysis
(MD&A) for the three and six-month periods ended December 31, 2008 (the "Q2
Financials") as well as its third quarter interim financial statements and
related MD&A for the nine month period ended March 31, 2009 (the "Q3
Financials"). As previously announced, the delay in the release of the
Company's Q2 Financials, and subsequently the Q3 Financials, is substantially
due to the investigations of the Special Committee appointed to investigate
the appropriateness of prior transactions entered into by the Company and the
difficulties in obtaining historical Coalcorp information from servers shared
with other public and private companies affiliated with former management. The
Company is in the process of finalizing the Q2 Financials and expects to
release those in the near term. The Q3 Financials are currently being prepared
and will be released shortly thereafter.

    
    About Coalcorp
    --------------
    
    Coalcorp is a coal mining, exploration and development company with
interests in the La Francia coal mine and related infrastructure projects and
a number of coal exploration properties, all located in Colombia. Coalcorp
also holds a 60% equity interest in Carbones Colombianos del Cerrejon which
owns the La Caypa coal mine in Colombia. Further information can be obtained
by visiting our website at www.coalcorp.ca or under the Company's profile at
www.sedar.com.

    
    Forward Looking Statements Disclaimer
    -------------------------------------
    
    Except as set forth herein, no decision on any particular initiative or
course of action has been reached at this time and there can be no assurance
that the strategic alternatives review process will proceed, or that the
Company will pursue any particular transaction. Coalcorp cautions the reader
that there is no guarantee that a transaction will result from the initiation
of the strategic review process that will create increased value for Coalcorp
and its stakeholders. The Company does not intend to make any further
announcements regarding the strategic alternatives review process unless and
until its Board has approved a specific transaction or otherwise deems
disclosure of developments is appropriate.
    Statements made in this news release may be forward-looking and therefore
subject to various risks and uncertainties. Some of the forward-looking
statements may be identified by words such as "expects" "will", "intends" and
similar expressions. These statements are not guarantees of future performance
or actions and undue reliance should not be placed on them. Certain material
factors or assumptions are applied in making forward-looking statements and
actual results may differ materially from those expressed or implied in such
statements. The Company cautions the reader that such forward-looking
statements involve known and unknown risks, uncertainties and other factors
that may cause the actual financial results, performance or achievements of
Coalcorp to be materially different from the Company's estimated future
results, performance or achievements expressed or implied by those
forward-looking statements and the forward-looking statements are not
guarantees of future performance. These risks, uncertainties and other factors
include, but are not limited to: the impact of global liquidity and credit
availability on the timing of cash flows and the values of assets and
liabilities based on projected future cash flows; the impact of current
litigation on Coalcorp; changes in the worldwide price of coal or certain
other commodities (such as fuel and electricity); fluctuations in currency
markets; legislative, political or economic developments in Colombia;
operating or technical difficulties in connection with mining or development
activities; employee relations; availability and costs associated with mining
inputs and labour; the ability to access transportation and port access; the
speculative nature of development, including the risks of obtaining necessary
licenses and permits and diminishing quantities or grades of reserves and
resources; level of indebtedness and liquidity; title to mining properties and
concessions; the risks involved in the exploration, development and mining
business. Certain of these factors are discussed in greater detail in the
Company's Annual Information Form on file with the Canadian provincial
securities regulatory authorities. Coalcorp undertakes no obligation to update
forward-looking statements if circumstances or management's plans should
change except as required by applicable securities laws. Such statements speak
only as of the date made.





For further information:

For further information: Joseph Belan, Interim Chief Executive Officer,
+57 - 1 - 658 - 5050 Ext: 9990

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Coalcorp Mining Inc.

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