CALGARY, March 31 /CNW/ - Cobalt Coal Corp. (TSX-V: CBT) ("Cobalt" or the "Corporation") is pleased to announce it has received a commitment letter from an arm's length party (the "Lender") in which the Lender has agreed to provide a CDN $1 mm loan (the "Loan") to the Corporation.
The proceeds of the Loan will be used to complete the purchase of the equipment required to re-start production at Cobalt`s Westchester Metallurgical Coal Mine, located in McDowell County, West Virginia. Cobalt is currently targeting late April to re-commence mining operations at Westchester.
The Corporation's President and CEO, David M. Lewis was quoted as saying, "The confirmation of this Loan is a very positive step in the continuing development of our company. We are very pleased with the direction Cobalt is moving at this time."
The Loan has a one year term which may be conditionally extended for an additional 6 months and carries a 15% annual interest rate. As additional consideration, the Lender will also receive warrants (the "Warrants") for the purchase of 3,000,000 common shares of Cobalt, with an exercise price of CDN $0.15 per share.
The Loan and the issuance of the Warrants are subject to TSX Venture Exchange approval.
Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.
Cobalt Coal Corp. is a publicly traded coal exploration and production company headquartered in Calgary, Alberta, Canada with a regional office in Welch, West Virginia USA. Cobalt was created in August 2007 to capitalize on the growth opportunities that exist in the modern metallurgical coal mining industry. Cobalt owns a 60% after payout interest in the Westchester Coal Mine, and operates this mine through its wholly owned subsidiary Westchester Coal GP Inc.
Initially, Cobalt is concentrating its efforts on developing an asset base in the Appalachian coal producing region of the United States, and will then expand internationally as opportunities allow. The Appalachian area includes parts of West Virginia, Virginia, Kentucky, Ohio, Pennsylvania, the Carolinas, and Tennessee. Appalachia's history of producing large volumes of metallurgical coal, along with the under-utilized coal infrastructure already in place, make the area ideal for the implementation of Cobalt's business model. Coal assets in the area can be acquired and brought into production relatively quickly. The resulting cash flows are generated in the short term without the need to invest large amounts of time and capital.
All of these factors align with Cobalt's strategy to provide near term cash flow and high growth to shareholders.
Statements in this press release may contain forward-looking information including expectations of future mining operations, the timing and ability of the Corporation to re-start the Westchester Coal Mine and access to credit facilities. The reader is cautioned that assumptions used in the preparation of such information may prove to be incorrect. Events or circumstances may cause actual results to differ materially from those predicted, a result of numerous known and unknown risks, uncertainties, and other factors, many of which are beyond the control of the Corporation. These risks include, but are not limited to, the risks associated with the coal mining industry, commodity prices and exchange rate changes. Industry related risks could include, but are not limited to, operational risks in exploration, development and production, delays or changes in plans, risks associated to the uncertainty of reserve estimates, health and safety risks and the uncertainty of estimates and projections of production, costs and expenses. The reader is cautioned not to place undue reliance on this forward-looking information.
SOURCE COBALT COAL CORP.
For further information: For further information: regarding Cobalt Coal Corp. please contact: David M. Lewis, President and CEO, Cobalt Coal Corp., (403) 262-5510; Investor Relations: The Howard Group, Dave Burwell, (403) 221-0915