TSX-V TRADING SYMBOL: CEC
VANCOUVER, Sept. 2 /CNW/ - Compliance Energy Corporation (the "Company")
is pleased to announce that it has signed definitive agreements with West
Fraser Mills Ltd. ("WFM") and with I-Comox Coal Inc,. a wholly owned
subsidiary of ITOCHU Corporation and LG International Investments (Canada)
Ltd. a wholly owned subsidiary of LG International Corp. ("the Parties") to
complete the purchase of approximately 29,000 hectares of WFM's freehold coal,
mineral, and gas interests on Vancouver Island and to provide the funding
necessary to reach a production decision on its Raven Coal Project which is
within the WFM option lands.
The definitive Purchase and Sale Agreement with WFM requires a lump sum
payment to complete the remaining payments, excluding royalties, which were
due under the terms of the original purchase option agreement. The purchase is
subject to full registration in BC's Land Title Office of the undersurface
rights associated with the Raven Coal Project which is expected to complete
within the next few weeks, but no later than November 30, 2008.
The Company has also signed a Sale and Purchase Agreement ("SPA") with
the Parties to fund a total of $11.25 million which includes a) the lump sum
payment to WFM, b) the refund to the Company of two prior option payments, and
c) up to $7.0 million for all the activities necessary to reach a production
decision on the Raven Coal Project including public consultation, additional
drilling, environmental assessment and transportation studies, and a
feasibility study. Through their funding payments, the Parties will earn a 40%
interest in the undersurface rights excluding gas interests, and a 40%
interest in the Company's crown coal licences at the Bear and Raven Coal
Projects (collectively the "Comox Basin Holdings").
The SPA also includes a detailed Joint Venture Agreement ("JVA") term
sheet ("JVA Term Sheet") that provides for the Company or its subsidiaries to
be the Manager and the Operator of any joint venture mining project located
within the Comox Basin Holdings and for the Parties to have exclusive global
marketing rights to sell coal from the Comox Basin Holdings. The JVA Term
Sheet contemplates that subject to satisfactory results of a feasibility study
and approval by the Parties' Boards of Directors, the Parties would provide
debt financing for the development of the Raven Coal Project. The parties have
agreed to use their best efforts to execute the JVA on the terms outlined in
the JVA Term Sheet by October 31, 2008. In the unlikely event that a JVA is
not fully executed or if the crown coal licences have not been registered in
the names of the Parties, as to their participating interest, by March 31,
2009, the SPA provides for the Company to refund the Purchase Price to the
Parties to reacquire 100% of the properties.
The Raven Coal Project located in the Comox Coal Basin of Vancouver
Island, British Columbia has 39,093,000 tonnes of measured and indicated and
59,004,000 tonnes of inferred coal resources as reported in the Company's
43-101 Technical Report prepared by O.R. Cullingham Resource Consultant Ltd.
(see press release May 29, 2007). The coal is classified as High Volatile A
Bituminous and would be suitable in a metallurgical coal blend or as a thermal
coal. The Bear Coal Project, which is located 10 kilometers from Raven, is
estimated to hold approximately 8.5 million tonnes of High Volatile A
Bituminous coal resources which exhibit good coking characteristics. The Bear
Coal Project resource estimate is not 43-101 compliant and readers are
cautioned that this resource estimate should not be relied upon.
ITOCHU Corporation is a major Japanese trading house and, among other
things, has extensive experience in the development of coal mines and the
marketing and sale of coal globally and has investments in coal mines in
Australia and Indonesia. ITOCHU had annual revenues of $29 billion US and Net
Income of $2.2 billion in the fiscal year ended March 2008.
LG International Corp. is a leading general trader in Korea with a
worldwide overseas branch network and has abundant experience in coal mining
development and the marketing and sales of coal worldwide. LG International
Corp. has annual revenues of $5.8 billion US and investments in coal mines in
Russia, Australia, and Indonesia.
Compliance Energy Corporation's shares trade on the TSX Venture Exchange
under the symbol CEC and investor information is available on the Company's
web page at www.complianceenergy.com.
On behalf of the Board of
COMPLIANCE ENERGY CORPORATION
Chief Executive Officer
The Toronto Stock Exchange has not reviewed and does not accept
responsibility for the adequacy or accuracy of this release.
Note: This release contains forward-looking statements that involve risks
and uncertainties. These statements may differ materially from actual future
events or results. Readers are referred to the documents, filed by the Company
on SEDAR at www.sedar.com, specifically the most recent reports which identify
important risk factors that could cause actual results to differ from those
contained in the forward-looking statements. The Company undertakes no
obligation to review or confirm analysts' expectations or estimates or to
release publicly any revisions to any forward-looking statements.
For further information:
For further information: John Tapics, CEO, at (604) 689-0489; or Rob
Roney, Investor Relations, at (250) 897-0437