TORONTO, April 6 /CNW/ - Pacific Coal Resources Ltd. (TSX-V: PAK)
("Pacific Coal" or the "Company") announced today an operational update
which demonstrates the progress of the Company to-date, and the
entering into of an investment option agreement with Alpha Ventures
Finance Inc. ("ALPHA"), Nano Dispersion Technology Inc. ("NDT"), and
Bioenergy International Inc. ("BIOINT"), all companies incorporated
under the laws of Panama.
Luis Carvajales, Chief Executive Officer of Pacific Coal, commented: "We
are very pleased to already see the results of increased efficiencies
at our La Caypa mine, which show that our mine plan is on track for
meeting our production and cost estimates. We are looking ahead to
secure transportation capacity for our planned growth and minimize any
possible logistical issues. Our new investment in BIOINT supports our
plan to become a leader in the growing industry of asphaltite
Current production at La Caypa
Actual production represents an increased annualized rate of over 1.3
million tonnes vs. management's projection of 1.2 million tonnes.
Actual strip ratio of 7.1:1 vs. management's estimate of 8.7:1
represents an approximate reduction of 18% and accounts for the
Company's year-to-date cost efficiencies.
Average achieved sale price was US$99/tonne FOB, representing revenues
in excess of US$35.5 million for Q1 2011.
Current production at Norcarbon/Cerro Largo
1 100% interest in Cerro Largo was acquired on March 28, 2011
Concurrently with the previously announced exercise of the option to
acquire the remaining 86% of Chianto S.A. (see news release dated March
29, 2011), and the rights to the Cerro Largo La Divisa mine, Pacific
Coal is jointly working with mine operator Masering S.A. in undertaking
an integrated mine plan to overcome the impact of extraordinary
rainfall during the second half of 2010. This aims to bring the
Company's production to an annualized minimum of 1.2 million tonnes by
2012. This integrated mining plan is expected to be implemented during
Update on commissioning of ovens at CI JAM
Eighty beehive ovens have been commissioned at C.I. Jam since Pacific
Coal initiated operations at the coking coal property. These ovens are
operating below capacity for a trial period and the Company aims to
achieve an annualized production rate of 36,000 tonnes of coke by the
end of Q2 2011. Pacific Coal opted to proceed with the construction of
an additional 80-oven beehive battery, which is expected to be
commissioned by the end of Q3 2011. Management estimates the additional
80 ovens can potentially increase production capacity to 72,000 tonnes
of coke per annum. The Company is evaluating the economics and
potential of building further Solera ovens on the property. Initially,
the raw coal to be utilized for the coke upgrading process will be
obtained from the Company's own and third party purchased production on
a 20/80 blend ratio. The Company's own production in the blend ratio is
expected to be increased gradually to 40% over the next 3 years in
order to reduce the reliance on third party purchased raw coal.
Exploration at La Tigra
Drilling at the La Tigra deposit has been re-scheduled and will start by
the end of Q2 2011. SRK Consulting is currently on site preparing
topographical information to provide the exploration grid with the
objective of an eventual preparation of a National Instrument 43-101
compliant technical report. Management estimates that production is
still on track to commence in late-2012.
Status on delivery of new truck fleet
Any impact to logistics that has been caused by reduced trucking volumes
due to the increased transport demand from the oil industry will be
mitigated by the commissioning of the Company's recently acquired
trucking fleet. New trucking units are expected to be commissioned at
the end of April 2011 in 15-unit lots on a weekly basis to complete 100
units. This will increase the total truck fleet available to Pacific
Coal to 170 units, which covers the Company's export schedule
Investment option agreement and coal/asphaltite trials
Pacific Coal has entered into an Investment Option Agreement (the
"Agreement") with ALPHA, NDT and BIOINT. Pursuant to this Agreement,
Pacific Coal has the right to acquire up to a 20% equity interest in
BIOINT in exchange for a US$20 million investment. BIOINT, with the
initial support of NDT and ALPHA, is now well advanced in the
development of a technology whereby asphaltite, coal and/or pet coke
may be crushed to a nano particle size and combined with water,
resulting in a colloidal suspension fuel intended to serve as an
alternate to fuel oil for the electricity generation industry. This
suspension is generally referred to as Colloidal Coal in Water or
("CCW") or Colloidal Asphaltite in Water ("CAW").
Pacific Coal has agreed to advance US$5 million out of its US$20 million
investment in BIOINT in exchange for a 5% equity interest and the
Company agrees to fund the remaining US$15 million subject to the
successful testing of CCW/CAW within the 3-month period following the
completion of such testing.
The Company will earn a 1% equity interest in BIOINT for every US$1
million invested, up to a maximum of 20% equity interest for a US$20
million investment. The US$20 million investment in BIOINT will be
funded by the Company's recently completed financing with gross
proceeds of over C$201 million (see news release dated March 11, 2011).
BIOINT also intends to raise an additional US$20 million to fund the
construction of the first plant for the production, marketing and sale
of CCW/CAW with the successful development of the technology.
BIOINT has already concluded successful trials of the technology with
pet coke. Direct and CCW/CAW combustion trials are scheduled to be
conducted with turbine manufacturer Babcok & Wilcox in early Q3 2011.
The required samples are in the process of being collected and prepared
by Pacific Coal.
Pursuant to the Agreement, the Company has been awarded additional
(i) An exclusive option to negotiate a 50/50 joint venture with
BIOINT to build one or more plants to produce and market CCW/CAW out of
its mines in Colombia. The plant(s) shall be operated by BIOINT and
BIOINT shall be entitled to an operating fee to cover operating costs
and expenses, plus a 6% technology royalty on the sales of CCW/CAW out
of such plant(s). Pacific Coal shall have the right to sell the coal
and/or asphaltite to the joint venture company at market prices.
(ii) Exclusive marketing rights for the CCW/CAW produced by the
plant(s) with a 2% agency fee on such sales;
(iii) A pre-emptive right to purchase, at its option, such number of
securities in any future equity offerings by BIOINT in order to
maintain its 20% equity interest; and
(iv) For so long as it is in compliance with the Agreement and remains
a shareholder of BIOINT, the Company shall have the right to appoint a
representative to the board of directors of BIOINT.
ALPHA is a private company controlled, directly or indirectly, by
Serafino Iacono, Miguel de la Campa, José Francisco Arata and other
investors, which has been funding and supporting NANO and BIOINT in the
research and development of alternate fuels, including the colloidal
technology, since 2009. In addition, pursuant to the Agreement, Pacific
Coal acknowledges the exclusive marketing right granted by BIOINT/NDT
to Pacific Rubiales Energy Corp. ("PRE"), which holds more than 10% of
the shares of the Company and has 5 directors who are also directors of
the Company, whereby PRE earns a marketing fee of two percent (2%) of
the total sales of any CCW cargo produced out of pet coke and sold by
About Pacific Coal Resources Ltd.
Pacific Coal Resources Ltd. is a Canadian-based mining company focused
on coal, coking coal, asphalt and asphaltite exploration, development
and production from prospective producing, development-stage and
exploration-stage properties in Colombia. The Company has acquired or
entered into agreements to acquire various interests in several
operating coal mines and projects, representing a substantive coal and
asphaltite exploration and production area throughout Colombia. Pacific
Coal is committed to implementing its exploration and development
strategy with a comprehensive environment, safety and community
program, meeting international standards of best practice.
Forward Looking Information:
This news release contains "forward-looking information", which may
include, but is not limited to, statements with respect to the future
financial or operating performance of the Company and its projects.
Often, but not always, forward-looking statements can be identified by
the use of words such as "plans", "expects", "is expected", "budget",
"scheduled", "estimates", "forecasts", "intends", "anticipates", or
believes" or variations (including negative variations) of such words
and phrases, or state that certain actions, events or results "may",
"could", "would", "might" or "will" be taken, occur or be achieved.
Forward-looking statements involve known and unknown risks,
uncertainties and other factors which may cause the actual results,
performance or achievements of Pacific Coal to be materially different
from any future results, performance or achievements expressed or
implied by the forward-looking statements. Forward-looking statements
contained herein are made as of the date of this press release and
Pacific Coal disclaim, other than as required by law, any obligation to
update any forward-looking statements whether as a result of new
information, results, future events, circumstances, or if management's
estimates or opinions should change, or otherwise. There can be no
assurance that forward-looking statements will prove to be accurate, as
actual results and future events could differ materially from those
anticipated in such statements. Accordingly, the reader is cautioned
not to place undue reliance on forward-looking statements.
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 news release.
SOURCE Pacific Coal Resources Ltd.
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